Assessing hospital cost data quality in the quest for a cost-effective health care

Abstract

Background: The objective is to examine hospital cost accounts in order to understand the foundation upon which large-scale health care decisions are based. More specifically, the aim is to add insights to accounting practices and their applicability towards a newly establish value-based agenda with a focus on patient-level cost data. Methods: We apply a cost accounting framework developed to position and understand hospital cost practices in relation to government requirements. Allocated cost account data from 2015 from all Danish hospitals were collected and analysed. Results: We find exceedingly aggregated department-level data that are not tied to patient information. We further observe variations in integrated cost centre definitions and allocation methods, as well as a melding of both overhead and indirect costs with direct costs at the department level. Additionally, we find large structural variances within hospitals. Conclusions: The findings raise concern about the cost accounts’ ability to provide valid information in health care decision-making due to a lack of transparency. Additionally, standardisation of costs stemming from hospitals with large organisational differences has significant implications on the fairness of resource allocation and decision-making at large. Thus, for hospitals to become more cost efficient, a substantially more detailed cost account system is essential.

Managing quality of cost information in clinical costing: evidence across seven countries

“…10 information is not tied to patient information, thereby not respecting national guidelines 225 (Malmmose and Lydersen, 2020) and, thus, being decoupled from the policy level (Kern, Lacuecir and Leca, 2018) This is an obstacle for tariff setting purposes at the policy level which requires standardization of costing data and costing practices across provider organizations (Busse et al, 2013). Without standardization costs for different procedures, the tariff does not convey meaningful information 230 and cannot be used to identify inefficiencies.…”

“…385 The tariff setting purpose is dominant at the regulatory level, requiring standardization. As underlined by several studies (Malmmose and Lydersen, 2020;Audit Commission, 2012, and Vogl, 2013, 2012, such standardization of costing is difficult in practice for regulators to achieve due to the high costs of implementing standards and collecting and auditing cost information. Moreover, there are difficulties observed in implementing guidelines at the provider level.…”

“…Moreover, there are difficulties observed in implementing guidelines at the provider level. These difficulties 390 go so far as costing practices in hospitals being decoupled from national guidelines (Malmmose and Lydersen, 2020;and Kern, Laguecir and Leca, 2018).…”

“…ward administration, a central administrative cost or operational administrative cost, and a different healthcare organization structure itself (Himmelstein et al, 2014). A recent study on the quality of cost data across Danish hospitals observes variations of definitions of costs and differences in allocation methods at the department level between hospitals (Malmmose and Lydersen, 2020). Furthermore, the study finds a melding of both overhead and indirect costs with direct costs at the department level.…”

“…Furthermore, the study finds a melding of both overhead and indirect costs with direct costs at the department level. Interestingly the study points out that often aggregate information is not tied to patient information, thereby not respecting national guidelines (Malmmose and Lydersen, 2020) and, thus, being decoupled from the policy level (Kern et al, 2018). This is an obstacle for tariff setting purposes at the policy level which requires standardization of costing data and costing practices across provider organizations (Busse et al, 2013).…”