Cost Unit Accounting Based on a Clinical Pathway: A Practical Tool for DRG Implementation

Abstract

Setting up a reliable cost unit accounting system in a hospital is a fundamental necessity for economic survival, given the current general conditions in the healthcare system. Definition of a suitable cost unit is a crucial factor for success. We present here the development and use of a clinical pathway as a cost unit as an alternative to the DRG. Elective coronary artery bypass grafting was selected as an example. Development of the clinical pathway was conducted according to a modular concept that mirrored all the treatment processes across various levels and modules. Using service records and analyses the process algorithms of the clinical pathway were developed and visualized with CorelTM iGrafix Process 2003. A detailed process cost record constituted the basis of the pathway costing, in which financial evaluation of the treatment processes was performed. The result of this study was a structured clinical pathway for coronary artery bypass grafting together with a cost calculation in the form of cost unit accounting. The use of a clinical pathway as a cost unit offers considerable advantages compared to the DRG or clinical case. The variance in the diagnoses and procedures within a pathway is minimal, so the consumption of resources is homogeneous. This leads to a considerable improvement in the value of cost unit accounting as a strategic control instrument in hospitals.

Payment by results vs. costs of 24-hour standby in hospitals: evidence from Poland

“…Standby costs do not fit the model assumptions of Payment by Results. By definition, the payment is set at a level proportionate to the costs incurred in the optimal course of the service (Waters, Husey, 2004;Feyrer et al, 2005;Schreyögg et al, 2006). Standby costs, however, are the costs of inactivity that should not occur at the optimal course of the service.…”

Development of clinical value unit method for calculating patient costs

“…For example, using the CVU method, managers can assess the impact of adverse events on the hospital costs in terms of incurring additional expenses or preventability. The importance of CVU method may increase particularly in those areas where pricing is based on DRG, as the effective operation of this concept depends largely on the proper cost accounting system, which ensures the cost homogeneity of individual groups (Feyrer, Rösch, Weyand, & Kunzmann, 2005;Raulinajtys-Grzybek, 2014). In this paper, we focused on hospital-based treatment approach.…”

Modularity in Health and Social Services

“…They are typically presented as flow charts (Chorpita et al, 2005). Breaking down the services is claimed to facilitate better cost-unit accounting (Feyrer et al, 2005) and management (Lim et al, 2009), the understanding of a complex range of supplies (de Blok et al, 2010a), and financial planning in terms of forecasting future increases and decreases (Larracey 1982). A modular structure was regarded positively because it enables the future expansion of services via additional modules (Hu & Ahmed 1989).…”