Editorial: Hospital case payment systems in Europe

Adjusting case mix payment amounts for inaccurately reported comorbidity data

Case mix methods such as diagnosis related groups have become a basis of payment for inpatient hospitalizations in many countries. Specifying cost weight values for case mix system payment has important consequences; recent evidence suggests case mix cost weight inaccuracies influence the supply of some hospital-based services. To begin to address the question of case mix cost weight accuracy, this paper is motivated by the objective of improving the accuracy of cost weight values due to inaccurate or incomplete comorbidity data. The methods are suitable to case mix methods that incorporate disease severity or comorbidity adjustments. The methods are based on the availability of detailed clinical and cost information linked at the patient level and leverage recent results from clinical data audits. A Bayesian framework is used to synthesize clinical data audit information regarding misclassification probabilities into cost weight value calculations. The models are implemented through Markov chain Monte Carlo methods. An example used to demonstrate the methods finds that inaccurate comorbidity data affects cost weight values by biasing cost weight values (and payments) downward. The implications for hospital payments are discussed and the generalizability of the approach is explored.

New hospital payment systems: comparing medical strategies in The Netherlands, Germany and England

PURPOSE

This paper seeks to identify different medical strategies adopted in relation to the new hospital payment systems in Germany, The Netherlands and England and analyse how the medical strategies have impacted on the emergence of these New Public Management policy tools between 2002 and 2007.

DESIGN/METHODOLOGY/APPROACH

A comparative approach is applied. In addition to secondary sources, the study uses publications in professional journals, official publications of the (national) physician organisations and a (non-random) expert questionnaire to obtain the views of the medical corporate bodies in the three countries.

FINDINGS

The results reveal differences in the medical strategies in the three countries that point towards the significance of institutional and interest configurations. The Dutch corporate medical body was most willing to solve the conflict, while the German and English corporate medical bodies seem to be keen to use a strategy of confrontation. The differences in medical strategies also impact on the ways in which hospital payment systems have emerged in the three countries.

RESEARCH LIMITATIONS/IMPLICATIONS

Further research is necessary to study the medical strategies in healthcare reforms from a broader perspective, for instance by including other countries.

ORIGINALITY/VALUE

The paper gives insights into the interplay between the medical profession and the government in the context of new managerial governance practices in the hospital sector. It adds to the scholarly debates about the role of the medical profession in health policy-making.

Are English treatment centres treating less complex patients?

Activity-based funding involves remunerating healthcare providers a fixed price per patient in each payment category. However, no categorisation system can account perfectly for differences in patient complexity. Differences may be systematic if providers routinely attract high-risk patients or engage in patient selection. Such differences may be evident in the English National Health Service (NHS) following the introduction of treatment centres that concentrate on providing a small number of high-volume procedures. We analyse data for more than 3.3 million patients to assess whether the complexity of those treated in hospitals and treatment centres differs within twenty-nine payment categories, defined by Healthcare Resource Groups (HRGs). We find that patients treated in hospitals were more likely to come from more deprived areas, to have more diagnoses and to undergo significantly more procedures than patients seen by treatment centres, suggesting that hospitals are treating more complex cases. If these observed differences between hospitals and treatment centres drive costs, then payments should be refined to ensure fair reimbursement.

A multidisciplinary audit of clinical coding accuracy in otolaryngology: financial, managerial and clinical governance considerations under payment-by-results

OBJECTIVES

To audit the accuracy of otolaryngology clinical coding and identify ways of improving it.

DESIGN

Prospective multidisciplinary audit, using the 'national standard clinical coding audit' methodology supplemented by 'double-reading and arbitration'.

SETTINGS

Teaching-hospital otolaryngology and clinical coding departments.

PARTICIPANTS

Otolaryngology inpatient and day-surgery cases.

MAIN OUTCOME MEASURES

Concordance between initial coding performed by a coder (first cycle) and final coding by a clinician-coder multidisciplinary team (MDT; second cycle) for primary and secondary diagnoses and procedures, and Health Resource Groupings (HRG) assignment.

RESULTS

1250 randomly-selected cases were studied. Coding errors occurred in 24.1% of cases (301/1250). The clinician-coder MDT reassigned 48 primary diagnoses and 186 primary procedures and identified a further 209 initially-missed secondary diagnoses and procedures. In 203 cases, patient's initial HRG changed. Incorrect coding caused an average revenue loss of 174.90 pounds per patient (14.7%) of which 60% of the total income variance was due to miscoding of a eight highly-complex head and neck cancer cases. The 'HRG drift' created the appearance of disproportionate resource utilisation when treating 'simple' cases. At our institution the total cost of maintaining a clinician-coder MDT was 4.8 times lower than the income regained through the double-reading process.

CONCLUSIONS

This large audit of otolaryngology practice identifies a large degree of error in coding on discharge. This leads to significant loss of departmental revenue, and given that the same data is used for benchmarking and for making decisions about resource allocation, it distorts the picture of clinical practice. These can be rectified through implementing a cost-effective clinician-coder double-reading multidisciplinary team as part of a data-assurance clinical governance framework which we recommend should be established in hospitals.

Comparing methodologies for the cost estimation of hospital services

The aim of the study was to determine whether the total cost estimate of a hospital service remains reliable when the cost components of bottom-up microcosting were replaced by the cost components of top-down microcosting or gross costing. Total cost estimates were determined in representative general hospitals in the Netherlands for appendectomy, normal delivery, stroke and acute myocardial infarction for 2005. It was concluded that restricting the use of bottom-up microcosting to those cost components that have a great impact on the total costs (i.e., labour and inpatient stay) would likely result in reliable cost estimates.

Adjusting for nursing care case mix in hospital reimbursement: a review of international practice

The purpose of this study was to examine and review the different ways in which nursing care can be accounted for in a general hospital reimbursement system. The study is based on a literature review and a survey of international experts. It provides a typology of nursing care adjustment methods, using current and past practices of 14 Western countries as key examples. The results of our review indicate that it is necessary to take the variability of nursing care within DRGs into account, not from a cost-accounting perspective, but from a management perspective in terms of correct resource allocation. However, further investigation of these complex relationships is urgently needed.

Strategies for conditional two-locus nonparametric linkage analysis

In this article we deal with two-locus nonparametric linkage (NPL) analysis, mainly in the context of conditional analysis. This means that one incorporates single-locus analysis information through conditioning when performing a two-locus analysis. Here we describe different strategies for using this approach. Cox et al. [Nat Genet 1999;21:213-215] implemented this as follows: (i) Calculate the one-locus NPL process over the included genome region(s). (ii) Weight the individual pedigree NPL scores using a weighting function depending on the NPL scores for the corresponding pedigrees at speci fi c conditioning loci. We generalize this by conditioning with respect to the inheritance vector rather than the NPL score and by separating between the case of known (prede fi ned) and unknown (estimated) conditioning loci. In the latter case we choose conditioning locus, or loci, according to prede fi ned criteria. The most general approach results in a random number of selected loci, depending on the results from the previous one-locus analysis. Major topics in this article include discussions on optimal score functions with respect to the noncentrality parameter (NCP), and how to calculate adequate p values and perform power calculations. We also discuss issues related to multiple tests which arise from the two-step procedure with several conditioning loci as well as from the genome-wide tests.

Cost and reimbursement of cataract surgery in Europe: a cross-country comparison

The number of cataract extractions has increased substantially over time. At present, cataract surgery is estimated to be the most common single procedure performed in the developed world. The present study compares the costs of a cataract intervention across nine European countries. To enhance comparability, data were collected using a common template based on a case vignette. Adequate data for analysis were collected from 41 providers and were used to evaluate variation across countries and providers. Ordinary least squares and a multilevel model were used to investigate cost variation. Mean total costs per cataract intervention varied considerably from country to country, ranging from 318 euros in Hungary to 1087 euros in Italy. Variations of a similar magnitude were detected for personnel costs and overheads. However, variations in the cost of the lens were more modest. Overall, our results confirm expectations about the causes of cost variations across EU member states, indicating that these variations may be attributable to the quantity of resources used in performing the operation, the price of resources, and the type of setting in which the operation is performed. The study highlights how accounting practices and available cost data differ across Europe. It also shows the feasibility of collecting data on the basis of vignettes using common cost templates. Studies following this approach will gain importance if cross-country comparisons are to be used to promote European benchmarking exercises.

Payment by results and coding practice in the National Health Service

This paper considers the new financial infrastructure of the National Health Service and provides a resource for orthopaedic surgeons. We describe the importance of accurate documentation and data collection for National Health Service hospital Trust finances and league tables, and support our discussion with examples drawn from our local audit work.

Challenges of rehabilitation case mix measurement in Ontario hospitals

Case mix classification systems have been adopted in many countries as a method to manage and finance healthcare in acute care settings; the most popular systems are based on diagnosis related groups. The most successful of those case mix systems differentiate patient types by reflecting both the intensity of resources consumed and patient acuity. Case mix systems for use with non-acute hospital activity have not been as wide-spread; other than in the United States, little attention has been directed towards case mix classification for rehabilitation activity. In a province with over 13 million inhabitants with 2496 rehabilitation beds, inpatient rehabilitation is an important component of hospital care in Ontario, Canada, and consists of the spectrum of intensive rehabilitation activities intended to restore function. Although case mix adjusted activity has been the currency in Ontario's Integrated Population Based Allocation hospital funding formula, rehabilitation activity has not been subjected to case mix measurement. A project to examine case mix classification for adult inpatient rehabilitation activity was initiated by the Ontario Ministry of Health and Long-Term Care whose outcome was a case mix system and associated cost weights that would result in rehabilitation activity being incorporated into the hospital funding formula. The process described in this study provides Ontario's provincial government with a case mix classification system for adult inpatient rehabilitation activity although there remain areas for improvement.

Payment by results for fractured neck of femur in two NHS Secondary Care Trusts

The NHS is in the midst of widespread financial and personnel restructuring. A cost-efficient organisation with effective Secondary Care Trust payment structure was envisaged in the government paper Delivering the NHS Plan. Payment by results (PbR) was introduced into the NHS in 2004 in an effort to finance Trusts fairly and reward work volume. PbR is a cost-per-case fixed national payment system based on Healthcare Resource Groups (HRG). A reduction in waiting times, increased productivity and better use of capacity are expected benefits. An improvement in data collection is anticipated. Similar payment structures are used in Europe, the US and Australia. PbR aims to create an individual tariff for each hospital patient episode. Primary Care Trusts (PCTs) will pay this tariff for the treatment of each individual patient in their resident population.

Tactical Increases in Operating Room Block Time Based on Financial Data and Market Growth Estimates from Data Envelopment Analysis

BACKGROUND

Data envelopment analysis (DEA) is an established technique that hospitals and anesthesia groups can use to understand their potential to grow different specialties of inpatient surgery. Often related decisions such as recruitment of new physicians are made promptly. A practical challenge in using DEA in practice for this application has been the time to obtain access to and preprocess discharge data from states.

METHODS

A case study is presented to show how results of DEA are linked to financial analysis for purposes of deciding which surgical specialties should be provided more resources and institutional support, including the allocation of additional operating room (OR) block time on a tactical (1 yr) time course. State discharge abstract databases were used to study how to perform and present the DEA using data from websites of the United States' (US) Healthcare Cost and Utilization Project (HCUPNet) and Census Bureau (American FactFinder).

RESULTS

DEA was performed without state discharge data by using census data with federal surgical rates adjusted for age and gender. Validity was assessed based on multiple criteria, including: satisfaction of statistical assumptions, face validity of results for hospitals, differentiation between efficient and inefficient hospitals on other measures of how much surgery is done, and correlation of estimates of each hospital's potential to grow the workload of each of eight specialties with estimates obtained using unrelated statistical methods.

CONCLUSIONS

A hospital can choose specialties to target for expanded OR capacity based on its financial data, its caseloads for specific specialties, the caseloads from hospitals previously examined, and surgical rates from federal census data.

The Impact of Service-Specific Staffing, Case Scheduling, Turnovers, and First-Case Starts on Anesthesia Group and Operating Room Productivity: A Tutorial Using Data from an Australian Hospital

BACKGROUND

In this tutorial, we consider the impact of operating room (OR) management on anesthesia group and OR labor productivity and costs. Most of the tutorial focuses on the steps required for each facility to refine its OR allocations using its own data collected during patient care.

METHODS

Data from a hospital in Australia are used throughout to illustrate the methods. OR allocation is a two-stage process. During the initial tactical stage of allocating OR time, OR capacity ("block time") is adjusted. For operational decision-making on a shorter-term basis, the existing workload can be considered fixed. Staffing is matched to that workload based on maximizing the efficiency of use of OR time.

RESULTS

Scheduling cases and making decisions on the day of surgery to increase OR efficiency are worthwhile interventions to increase anesthesia group productivity. However, by far, the most important step is the appropriate refinement of OR allocations (i.e., planning service-specific staffing) 2-3 mo before the day of surgery.

CONCLUSIONS

Reducing surgical and/or turnover times and delays in first-case-of-the-day starts generally provides small reductions in OR labor costs. Results vary widely because they are highly sensitive both to the OR allocations (i.e., staffing) and to the appropriateness of those OR allocations.