Andrew Street

Diagnosis related groups in Europe : moving towards transparency, efficiency, and quality in hospitals?

Hospitals in most European countries are paid on the basis of diagnosis related groups. Reinhard Busse and colleagues find much variation within and between systems and argue that they could be improved if countries learnt from each other

Maximizing health benefits vs egalitarianism: An Australian survey of health issues

Economists have often treated the objective of health services as being the maximization of the QALYs gained, irrespective of how the gains are distributed. In a cross section of Australians such a policy of distributive neutrality received: (a) very little support when health benefits to young people compete with health benefits to the elderly; (b) only moderate support when those who can become a little better compete with those who can become much better; (c) only moderate support when smokers compete with non smokers; (d) some support when young children compete with newborns; and (e) wide spread support when parents of dependent children compete with people without children. Overall, the views of the study population were strongly egalitarian. A policy of health benefit maximization received very limited support when the consequence is a loss of equity and access to services for the elderly and for people with a limited potential for improving their health.

Measuring Efficiency in Health Care: Analytic Techniques and Health Policy

With the healthcare sector accounting for a sizeable proportion of national expenditures, the pursuit of efficiency has become a central objective of policymakers within most health systems. However, the analysis and measurement of efficiency is a complex undertaking, not least due to the multiple objectives of health care organizations and the many gaps in information systems. In response to this complexity, research in organizational efficiency analysis has flourished. This 2006 book examines some of the most important techniques currently available to measure the efficiency of systems and organizations, including data envelopment analysis and stochastic frontier analysis, and also presents some promising new methodological approaches. Such techniques offer the prospect of many new and fruitful insights into health care performance. Nevertheless, they also pose many practical and methodological challenges. This is an important critical assessment of the strengths and limitations of efficiency analysis applied to health and health care.

Who cares about cost? Does economic analysis impose or reflect social values?

In a two-stage survey, a cross-section of Australians were questioned about the importance of costs in setting priorities in health care. Generally, respondents felt that it is unfair to discriminate against patients who happen to have a high cost illness and that costs should therefore not be a major factor in prioritising. The majority maintained this view even when confronted with its implications in terms of the total number of people who could be treated and their own chance of receiving treatment if they fall ill. Their position cannot be discarded as irrational, as it is consistent with a defensible view of utility. However, the results suggest that the concern with allocative efficiency, as usually envisaged by the economists, is not shared by the general public and that the cost-effectiveness approach to assigning priorities in health care may be imposing an excessively simple value system upon resource allocation decision-making.

The Significance of Age and Duration of Effect in Social Evaluation of Health Care

To give priority to the young over the elderly has been labelled ‘ageism’. People who express ‘ageist’ preferences may feel that, all else equal, an individual has greater right to enjoy additional life years the fewer life years he or she has already had. We shall refer to this asegalitarian ageism. They may also emphasise the greater expected duration of health benefits in young people that derives from their greater life expectancy. We may call thisutilitarian ageism. Both these forms of ageism were observed in an empirical study of social preferences in Australia. The study lends some support to the assumptions in the QALY approach that duration of benefits, and hence old age, should count in prioritising at the budget level in health care.

Cost effectiveness of shortening screening interval or extending age range of NHS breast screening programme: computer simulation study

Abstract Objective : To compare the cost effectiveness of two possible modifications to the current UK screening programme: shortening the screening interval from three to two years and extending the age of invitation to a final screen from 64 to 69. Design : Computer simulation model which first simulates life histories for women in the absence of a screening programme for breast cancer and then assesses how these life histories would be changed by introducing different screening policies. The model was informed by screening and cost data from the NHS breast screening programme. Setting : North West region of England. Main outcome measures : Numbers of deaths prevented, life years gained, and costs. Results : Compared with the current breast screening programme both modifications would increase the number of deaths prevented and the number of life years saved. The current screening policy costs £2522 per life year gained; extending the age range of the programme would cost £2612 and shortening the interval £2709 per life year gained. The marginal cost per life year gained of extending the age range of the screening programme is £2990 and of shortening the screening interval is £3545. Conclusions : If the budget for the NHS breast screening programme were to allow for two more invitations per woman, substantial mortality reductions would follow from extending the age range screened or reducing the screening interval. The difference between the two policies is so small that either could be chosen.

Activity based financing in England: the need for continual refinement of payment by results

The English National Health Service is introducing activity based tariff systems or Payment by Results (PbR) as the basis for hospital funding. The funding arrangements provide incentives for increasing activity, particularly day surgery, and, uniquely, are based on costing data from all hospitals. But prices should not be based on average costs and the potential of PbR to improve the quality of care is yet to be exploited. Without refinement, PbR threatens to undermine expenditure control, to divert resources away from primary care, and to distort needs based funding.

How Well Do Diagnosis‐Related Groups Explain Variations In Costs Or Length Of Stay Among Patients And Across Hospitals? Methods For Analysing Routine Patient Data

We set out an analytical strategy to examine variations in resource use, whether cost or length of stay, of patients hospitalised with different conditions. The methods are designed to evaluate (i) how well diagnosis-related groups (DRGs) capture variation in resource use relative to other patient characteristics and (ii) what influence the hospital has on their resource use. In a first step, we examine the influence of variables that describe each individual patient, including the DRG to which the patients are assigned and a range of personal and treatment-related characteristics. In a second step, we explore the influence that hospitals have on the average cost or length of stay of their patients, purged of the influence of the variables accounted for in the first stage. We provide a rationale for the variables used in both stages of the analysis and detail how each is defined. The analytical strategy allows us (i) to identify those factors that explain variation in resource use across patients, (ii) to assess the explanatory power of DRGs relative to other patient and treatment characteristics and (iii) to assess relative hospital performance in managing resources and the characteristics of hospitals that explain this performance.

Examining cost variation across hospital departments–a two-stage multi-level approach using patient-level data

Studies of hospital efficiency seldom lead to changes in practice, partly because recommendations are unspecific or results are not seen as robust. We describe a method to compare hospital costs that utilises patient-level data. We perform a two-stage analysis in which we first consider factors that explain costs among patients and then across hospital departments. We illustrate our approach by examining the costs and characteristics of almost one million patients admitted to 136 English NHS hospital obstetrics departments in 2005/2006. We identify those departments with significantly higher costs that need to take action.

Are waiting lists inevitable

Waiting lists are a common phenomenon in markets in which non-price allocation of goods and services occurs. To the extent that waiting lists for in-patient health services are perceived to ration imperfectly, many propose policies which focus on reducing demand or increasing supply. Strategies aimed at increasing supply often create perverse incentives in that they reward hospitals with long waiting lists through the provision of additional resources. This paper describes how supply has been addressed in Victoria by changing the financial incentives relating to waiting lists. The success of this payment policy in reducing waiting lists to public hospitals is reported.