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The variation in hospital charges: a problem in determining cost/benefit for cardiac surgery
Insights
Hospital charges for cardiac operations varied significantly in 1976, with the middle 50% ranging from $5,914 to $10,315. Individualizing services, not just caseload, could reduce cardiac surgery costs.
Area of Science:
- Health Economics
- Cardiovascular Surgery
Background:
- Hospital billing practices in the mid-1970s lacked standardization.
- Understanding cost variations for cardiac operations is crucial for healthcare analysis.
Purpose of the Study:
- To analyze the range and determinants of hospital charges for cardiac operations in the United States.
- To assess the accuracy of hospital billing and identify factors influencing cost.
Main Methods:
- Analysis of 417 itemized bills from 45 US hospitals surveyed between January and June 1976.
- Utilized a randomized, geographically stratified survey design.
- Examined components of hospital charges, including laboratory and pharmacy fees.
Main Results:
- The interquartile range for cardiac operation charges was $5,914 to $10,315.
- High-cost items like lab and pharmacy constituted 60% of itemized bills.
- Increasing caseload or decreasing operating room time did not significantly lower total charges.
- Individualized service management reduced charges by up to 16% in one hospital.
- Charge per day was an unreliable efficiency metric due to longer stays correlating with lower daily averages.
Conclusions:
- Significant variation in hospital charges for cardiac operations exists.
- Lack of uniform accounting practices hinders accurate cost-benefit analysis.
- Service individualization shows potential for cost reduction in cardiac surgery care.
Abstract:
Based on 417 itemized bills from 45 American hospitals that responded to a randomized, geographically stratified survey covering January to June, 1976, the middle 50% of hospital charges for cardiac operations ranged between $5,914 and $10,315. Nonitemizing hospitals submitted lower, but less accurate, estimates. As 60% of the itemized bill consisted of high charge/cost items such as laboratory and pharmacy fees, total charges were not lowered merely by increasing case load or decreasing operating room times. Careful individualization of services in 1 hospital, however, reduced charges up to 16%. Charge per day was a poor index of efficiency because patients staying longer had lower average daily charges. The variation in hospital charges and lack of accounting uniformity preclude meaningful quantitation of either the "typical" charge or the numerator of the cost/benefit ratio for cardiac operations.