Term
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Definition
Decision support system used in hospital that operate in a contractual environment to provide reliable info for business planning.
Modelling applied to area of;
-financial monitoring and planning to analyse & estimate hospital speciality costs at a given level & forecast the cost consequences of change in Resorces or activity level
-hospital service planning to forecast the consequences of changes in activity for staffing beds & operation theatres |
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Term
| How do hospital costs behave : r/ship btw cost & activity |
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Definition
-Costs defined as measures of loss of monetary value when a resource is acquired or consumed
-cost of using diff resources relates to activity & can be used to
a) forecast & budget
b) calculate prices for the services in a contractual environment
c)compare costs btw wards, specialities or hospitals
d) determine whether a service should be provided in housed or contracted out |
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Term
| How do hospital costs behave : r/ship btw cost & activity |
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Definition
-cost of a specific service dp on:.
1/The resources employed ( resource mix)
2/Quantity if each resource required
Resources have diff characteristics in way their costs are affected when activity changes -way cost respond to changes in activity is called cost behaviour
Diff type of cost ;
Resources can be grouped into
a)variable costs ; change simultaneously as activity in a linear relationship
Y=bx
b) fixed costs stay constant ( in the short run with changes in activity.
Y=a
c) semi-variable contains a fixed and a variable element e.g standing charge payable regardless of whether input used + cost that varies as activity varies
Y= a + bx
d) Stepped cost behave like a fixed cost upon until a certain threshold is reachedx, when activity incr further cost step to a higher level .
Total costs is combination of all these resources at a certain level of output
e) average cost calculated by dividing total cost by quantity produced
f) marginal cost r cost for producing one more unit of output |
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Term
| Using hospital models in projecting costs & planning services |
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Definition
-Project impact of changes in on financial performance activity
-during planing cycle budgets are prepared based on estimated levels if activity
-in final comparison of actual results with the budget you need to estimate again what costs should have been for the actual levels of activity which were achieved
- Disadv:
1/provides a simplified representation of reality & their predictions & estimates are only approximations
2/ costs are difficult to predict as HC is highly complex & varies with pt needs w/c cannot be perfectly predicted
3/ capacity models deal with activities & capacities but do not predict costs
-Adv.;
imp source of information that assist in decision making
Limitations :quality of the data that are used as inputs & degree to w/c it takes into account the interaction btw diff variables
-Before introducing such a model u need to have a 1/clear management objectives related to agreed levels of service provision. 2/The required activity to achieve these targets and possible efficiency gains |
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Term
| Multiple linear regression |
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Definition
-Approach to estimate cost that uses aggregate data from different hospital ( from the routine data systems)
-statistical technique that is used to estimate the influence of a range of variables on total costs ( eg disease severity , age , presence of comorbide Cdx
& length of stay ) w/c may all Pedict pt cost .
Limitations; although suitable for economic & health policy analysis, rarely used in individual hospitals |
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Term
| Hospital planning models ; are incorporated into the information technology system thus use routine data |
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Definition
-answers questions related to how much a service cost & what factors affect it's cost
-hospital models answer these questions as part of the IT system s (HIC): can combine diff areas & be linked to info on case mix .
Drawbacks;
-a system collecting activities & cost data needs to be in place ( additional recording not favoured by clinicians )
-hospital info systems are expansive ( hardware & software + staff training & maintenance costs)
-hosp model useful in contracting environment where providers deal wit diff forms of payment & diff purchasers |
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Term
| Marginal cost approach based on Cost triggers |
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Definition
-imp factor of hospital planning
-as long ad activity levels are w/in capacity; capital costs are fixed . But to expand activity levels beyond current capacity involved additional capacity at extras cost
-also reducing capacity may not save much in the way of costs unless the reduction to e.g close a ward / dispose of an item of equipment
-in these models the approach to costing cannot be based on average costs because as not closely enough related to Changes in activity instead use marginal cost |
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Term
| Case mix models based on systems that allow the type of pts treated to be related to resource used |
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Definition
| - more advanced models as record activity for each pt , using a case mix system that allows the types of patients treated to be related to resource use -incorporate info on diagnoses, procedure & disease severity + intensity of care, type of admission , type spend in hosp -eg. Diagnosis related groups used in reimbursement of providers of trx for Medicare pts in USA -provides a basis for prospective case-based payment of hospital service they are mainly used for : a) research : get detailed info on service use for clinicians & health service research b) planning; many countries for strategic capacity planning and contracting for hospital sector . Population level models case mix info used to simulate codes & csquences if change in service provision. c) resource allocation : case mix sustend are used to allocate & develop central budgets d) quality improvement: pt classification systems support the development of clinical guidelines /pathways & allow performance of HC organisations to be compared across range of inputs & outputs Examlple of case mix model is DRGs: -used as a basis for prospective payments for hosp services -allows a fixed price to be set for all cases in the same diagnostic category -purchasers set the reimbursement level to the average cost for each DRG & hospital free to decide number of case treated, the inputs used & length of stay -hosp may try to make a surplus by delivering services with shorter lengths of stay, by specialising in certain treatments, substituting inputs or they economies if scale |
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Term
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Definition
-Combines info from:
1/pt data ( demographic & clinical data )
2/activity data( on types of procedures / interventions received, lengths of care),
3/financial data( cost profiles per individual case or agreed cost weights )
-Each case is assigned the appropriate diagnostic & procedural categ + dimensions that capture & differentiate the process of care
-the way each case is assigned the correct DRG is determined by an algorithm
In Australian DRG code consist of three separate Elts
1/main diagnostic categ based on WHO international classification of diseases
2/the type if treatment received
3/the level of resource use based on an index measuring clinical complexity and co-morbidity of the case
Quality of coding is crucial , each DRG has a unique code describing diagnosis. & course of trx |
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Term
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Definition
-Why imp; to negotiate price managers need good info about cost & case mix of service provided
-base rates calculated for individual hosp can be used to compare cost per case across region( regional base rate). Later is imp in competitive environ as used by purchasers to set prices
-case mix index (CMI) is an average measure of disease severity across all cases treated in an entire department or hospital in a year . CMI allows anual income to be assessed
Limitations ;
1/using DRG for modelling hosp cost is complex and expensive because it involves exact info about the costs per case & careful monitoring of the case mix
2/measured are needed to prevent DRGs being abused;
-case Mix models should captures the course of trx accurately but not support bad practice : model build on agreed guidelines & clinical pathways + rigorous audit
-pricing system based on DRG make a range of provisions to discourage unwanted provider behaviour , esp under provision of service or inappropriate admission or d/c
- inappropriate coding of cases leading to pts appearing sicker than they are . This form of misclassification is called" DRG creep" |
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