Research without billing data. Econometric estimation of patient-specific costs

Area of Science:

• Health Economics
• Healthcare Management
• Biostatistics

Background:

• Healthcare systems often lack detailed billing data for individual patient cost calculation.
• Existing methods for cost estimation may not fully capture variations in resource utilization.
• Accurate patient-level cost data is crucial for resource allocation and financial management.

Purpose of the Study:

• To describe a novel method for computing individual patient care costs in healthcare systems without routine billing data.
• To estimate cost variations based on patient and facility characteristics using aggregate data.
• To determine the costs of acute hospital, long-term care, and outpatient services.

Main Methods:

• Utilized aggregate cost and utilization data from the US Department of Veterans Affairs.
• Developed cost functions leveraging department-level data organization.
• Employed casemix measures to ascertain costs for acute hospital and long-term care.

Main Results:

• Average costs: medical hospitalization ($5,642/DRG weight), surgical hospitalization ($11,836/DRG weight), nursing home care ($197.33/day), intermediate care ($280.66/day), psychiatric care ($307.33/day), domiciliary care ($111.84/day), and outpatient visits ($90.36).
• Estimates incorporate physician service costs.
• The method accounts for 40% of the variation in acute hospital care costs.

Conclusions:

• The econometric method effectively accounts for casemix-driven resource use variations beyond length of stay.
• It also incorporates factors like medical education, research, facility size, and wage rates.
• This approach is superior to cost estimations solely based on length of stay or diagnosis-related group weight.