One strategy for controlling costs in university teaching hospitals

Major teaching hospitals, because they treat a more complex mix of patients than do nonteaching hospitals, usually show higher costs per patient day or per case. As a result, teaching hospitals are particularly vulnerable to the decisions of those cost control and planning agencies that are unable or unwilling to treat the problem of case mix. Research at Yale University reported here demonstrates the effect of case mix on costs. A methodology is outlined that can be used by teaching hospitals in determining their costs of treating patients with a complex mix of diagnoses. It is not held that case mix alone explains all of the cost differences between teaching and nonteaching hospitals; but until that factor is isolated and identified, the other contributors to cost variation cannot be examined.