Cross-country comparisons of costs: the use of episode-specific transitive purchasing power parities with standardised cost categories

Abstract

SUMMARYInternational comparisons of healthcare costs are growing in importance for a number of different applications. The use of common approaches to converting costs such as GDP purchasing power parities (PPPs) often does not reflect price differences in healthcare in an appropriate manner. This means that new approaches need to be explored. The objective of this paper is to demonstrate the feasibility of using episode-specific PPPs (ESPPPs) to facilitate cross-country comparisons of healthcare costs and to compare this approach with other common approaches to conversion. Costs for five care episodes from hospitals in eight European countries were obtained from the EU HealthBASKET project. ESPPPs were created by using Fisher-type PPPs in combination with the Elteto¨-Ko¨ves-Szulc method at the episode level. Differences in ESPPPs among the five care episodes were discussed and compared with other common conversion approaches. We found that ESPPPs-reflected prices and resource use more accurately than conventional conversion approaches such as GDP PPPs and medical care PPPs. This was particularly evident for labour-intensive care episodes in which other conversion approaches revealed problems in the way that labour input had not been considered appropriately. The results demonstrate that ESPPPs are preferable to other common conversion approaches when international healthcare cost comparisons are performed.

Variability in healthcare treatment costs amongst nine EU countries – results from theHealthBASKET project

“…This was particularly evident after adjustment for PPP (cf. data in Schreyo¨gg et al, 2008). These differences are partly due to different accountancy standards, but also due to prices per input unit and, most importantly, due to large and apparently real differences in practice.…”

“…acute care and rehabilitation), episodes of chronic care (such as in disease management programmes), and extending the comparison to quality of care. There is also a scope for addressing methodological issues, such as making the allocation of overhead costs more comparable, and constructing healthcare-specific PPPs as explored by Schreyo¨gg et al (2008) in this volume. A prerequisite for international cost comparison on a broader and more representative base is the existence of universally accepted methodological guidance for routine data assembly (a standard costing method), comparable accounting and analytic approaches, and reasonably good compliance.…”

The hospital costs of care for stroke in nine European countries

“…Length of stay at the acute hospital is influenced by policies for rehabilitation. In the Danish hospital, patients were on average transferred to a rehabilitation hospital within 5 days, while other countries to a varying extent initiated rehabilitation therapies in the admitting hospital (Schreyo¨gg et al, 2008;Grieve et al, 2005a). The availability of appropriate long-term Table II residential or nursing care is likely to be a constraint though this was not examined in this study.…”

“…One option to address this might be to convert the prices of relatively tradable items such as drugs at the official exchange rate and convert the costs of non-tradeables using PPPs. Alternatively, the vignette methodology could itself be used to calculate episode-specific PPPs for hospital stroke care (Wordworth and Ludbrook, 2005;Schreyo¨gg et al, 2008;Grieve et al, 2005b). The vignette methodology used in this study appears feasible to collect resource use and costs for most hospital providers of stroke services.…”

Generalisability, Transferability, Complexity and Relevance

“…An improved approach is to employ exchange rates based on purchasing power parities (PPPs), which take into account the relative cost of living and the inflation rates of different settings, and international dollars are the most frequently used currency in this approach. [22][23][24][25] However, this approach completely ignores any variations in the aforementioned factors that affect generalisability within and between settings.…”