How is the Cost Structure of Hospital in Developing Countries? A Case of Public University Hospitals in Iran

Document Type : Original Article

Authors

1 PhD Student in Health Services Management, Faculty of Management and Medical Informatics, Kerman University of Medical Sciences, Kerman, Iran

2 Professor in Health Services Management, Faculty of Management and Medical Informatics, Kerman University of Medical Sciences, Kerman, Iran

3 Assistant Professor in Health Policy, Health Services Management Research Center, Institute for Futures Studies in Health, Kerman University of Medical Sciences, Kerman, Iran

Abstract

Background: The health systems around the world are facing significant pressure to control the costs and improve the health services delivered. A method to address this challenge is to express the potential savings and inefficiencies of hospitals. The hospitals should provide health care services with the acceptable quality and minimum cost. For this purpose, managers should have accurate information about the cost of the services they provide.
Methods: This is a cross-sectional retrospective study  carried out based on the data of financial year of 2017-2018. In this study, the cost structure of Shafa Hospital was analyzed and its unit cost of the final activity centers was calculated using top-down approach.
Results: The total cost of the hospital in the studied period was US$ 29752539.1. The highest and lowest cost share was related to human resources and energy consumption (64.33% and 0.48%, respectively). The human resources, medicines, and consumables account for over 96% of the cost of the final clinical activity centers. The unit cost of the final activity centers varies so that among admission wards the unit cost of ICU is the highest (US$372.45) and the daily bed cost in the neurology ward is the lowest (US$118.9).
Conclusion: Clarification of the hospital cost structure can provide a comprehensive analysis of hospital costs for decision making and policy making. The unit cost of the final activity centers also provides insights into the hospital cost management planning.

Keywords

References

1. Stock GN, McDermott C. Operational and contextual drivers of hospital costs. J Health Organ Manag. 2011;25(2):142-58. doi: 10.1108/14777261111134392.
2. Than TM, Saw YM, Khaing M, Win EM, Cho SM, Kariya T, et al. Unit cost of healthcare services at 200-bed public hospitals in Myanmar: what plays an important role of hospital budgeting? BMC Health Serv Res. 2017;17(1):669. doi: 10.1186/s12913-017-2619-z.
3. Hrifach A, Ganne C, Couray-Targe S, Brault C, Guerre P, Serrier H, et al. National cost study versus hospital cost accounting for organ recovery cost assessment in a French hospital group. Cost Eff Resour Alloc. 2018;16:34. doi: 10.1186/s12962-018-0155-2.
4. Oostenbrink JB, Buijs-Van der Woude T, van Agthoven M, Koopmanschap MA, Rutten FF. Unit costs of inpatient hospital days. Pharmacoeconomics. 2003;21(4):263-71. doi: 10.2165/00019053-200321040-00004.
5. Neriz L, Nunez A, Ramis F. A cost management model for hospital food and nutrition in a public hospital. BMC Health Serv Res. 2014;14:542. doi: 10.1186/s12913-014-0542-0.
6. Javid M, Hadian M, Ghaderi H, Ghaffari S, Salehi M. Application of the Activity-Based Costing Method for Unit-Cost Calculation in a Hospital. Glob J Health Sci. 2015;8(1):165-72. doi: 10.5539/ gjhs.v8n1p165.
7. Olukoga A, Harris G. Costs of district hospitals in South Africa. Journal of Interdisciplinary Economics. 2005;16(4):431-40. doi: 10.1177/02601079X05001600404.
8. Stey AM, Brook RH, Needleman J, Hall BL, Zingmond DS, Lawson EH, et al. Hospital costs by cost center of inpatient hospitalization for medicare patients undergoing major abdominal surgery. J Am Coll Surg. 2015;220(2):207-17 e11. doi: 10.1016/j.jamcollsurg.2014.10.021.
9. Bai G, Tim Xu M, Rogers AT, Anderson GF. Hospitals with Higher Direct Cost Ratios Have Lower Readmission Rates. Journal of Health Care Finance. 2017;43(3).
10. Aboagye AQ, Degboe AN, Obuobi AA. Estimating the cost of healthcare delivery in three hospitals in southern ghana. Ghana Med J. 2010;44(3):83-92. doi: 10.4314/gmj.v44i3.68890.
11. Smet M. Cost characteristics of hospitals. Social Science & Medicine. 2002;55(6):895-906. doi: 10.1016/S0277 9536(01)00237-4.
12. Murru M, Corrado B, Odaga J, Ahairwe D, Akulu E, Bavcar A, et al. Costing health services in Lacor hospital. 2003;1(1).
13. Swierkowski P, Barnett A. Identification of hospital cost drivers using sparse group lasso. PLoS One. 2018;13(10):e0204300. doi: 10.1371/journal.pone.0204300.
14. Roberts RR, Frutos PW, Ciavarella GG, Gussow LM, Mensah EK, Kampe LM, et al. Distribution of variable vs fixed costs of hospital care. JAMA. 1999;281(7):644-9. doi: 10.1001/jama.281.7.644.
15. Japsen B, Pallarito K. Amicable divorces. Academic medical centers refocus on their teaching mission by shedding hospitals. Mod Healthc. 1995;25(6):34-6, 8.
16. Riewpaiboon A. Measurement of costs for health economic evaluation. J Med Assoc Thai. 2014;97 Suppl 5:S17-26.
17. Markazi Moghaddam N, Goudarzi R, Meshkani Z. Surveying activity based costing of final units (a case study in one of the armed forces hospitals). Journal of Hospital. 2016;15(1):41-50.
18. Younis MZ, Jaber S, Mawson AR, Hartmann M. Estimating the unit costs of public hospitals and primary healthcare centers. Int J Health Plann Manage. 2013;28(4):320-32. doi: 10.1002/hpm.2147.
19. Grosfeld-Nir A, Ronen B, Kozlovsky N. The Pareto managerial principle: when does it apply? International Journal of Production Research. 2007;45(10):2317-25. doi: 10.1080/00207540600818203.
20. Chatterjee S, Levin C, Laxminarayan R. Unit cost of medical services at different hospitals in India. PLoS One. 2013;8(7):e69728. doi: 10.1371/ journal.pone.0069728.
21. McPake B, Hongoro C, Russo G. Two-tier charging in Maputo Central Hospital: costs, revenues and effects on equity of access to hospital services. BMC Health Serv Res. 2011;11:143. doi: 10.1186/1472-6963-11-143.
Health Management & Information Science
Volume 7, Issue 3
July 2020
Pages 179-186

Files

Share

How to cite

Statistics