drg workshop belgrade, 18-22.november 2013. setting the drg cost weights. content of drg costs/cost...
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DRG Workshop Belgrade, 18-22.November 2013.
Setting the DRG cost weights. Content of DRG costs/cost
weights
Prof Ric Marshall OAMThe University of Sydney.
DRG Workshop Belgrade, 18-22.November 2013.
Typical Patient Costing System
DRG Workshop Belgrade, 18-22.November 2013.
Typical program for first cost weights and schedule
DRG Workshop Belgrade, 18-22.November 2013.
DRG Workshop Belgrade, 18-22.November 2013.
DRG Workshop Belgrade, 18-22.November 2013.
• Current readiness for product costing:– current casemix or other costing methodology.– any current specialty costing process.– need for product/patient costing – stakeholders views.– ability of hospitals/clusters to provide standard inputs:
– COA financial data, standard volume statistics, approaches to overhead allocations
– capacity to develop a centrally operated product costing service:
– Where product costing should fit into the overall reporting structure– Broad roadmap for the development of product costing over the next
several years.
International experience appropriate? Main approaches – strengths, weaknesses. Potential risks, problems. Available standards.
How ready is your system?
DRG Workshop Belgrade, 18-22.November 2013.
• Standardised units of activity– Community based – primary/fm, specialist– Inpatients – Acute (+-ICU), Rehab, etc– Outpatients – booked/sorted– Emergency – ambulatory
• Cost effectiveness measurement – accrued– National/Regional Health Accounts– Health program statistics - Annual reports – Best practice – Care model development
• Budget and payments management
USES OF UNIT PRODUCT COST
DRG Workshop Belgrade, 18-22.November 2013.
Health sector
outputs
Hospital services
Personal health
services
1: public health
services
5: tertiary hospital services
4: hospital inpatient services
3: hospital-based
ambulatory services
2: non-hospital services
2-1: home care
5-1: tertiary severity
5-3: teaching
5-2: research
4-5: nursing maintenance
4-4: palliation
4-3: rehabilitation
4-2: acute inpatient care
4-1: intensive care
3-2: emergency department
1-1: food and drugs safety
1-2: environmental
1-3: health protection
3-1: outpatient clinics
2-6 dental
2-5: other non-hospital services
2-4: nursing home services
2-3: specialist medical care
2-2: primary medical care
Subacute inpatient
care
5 major 5 major productproduct groupsgroups
18 major 18 major product product
subgroupssubgroups
Non-admittedservices
DRGS
DRG Workshop Belgrade, 18-22.November 2013.
• Breakdown of actual total hospital expenditure to the DRG level.
• Need hospitals that can provide BOTH – activity utisation (‘cost driver’) data and
– accurate, detailed financial data.
• Allocating cost data from the hospital general ledger and accounting systems to DRG episodes using ‘cost driver’ resource use data (cost modeling)– Relative DRG resource allocation statistics where actual
amounts cannot be obtained. Eg Nursing SWs
DRG COSTING FUNDAMENTALS
DRG Workshop Belgrade, 18-22.November 2013.
• DRG funding to influence efficiency in a particular setting = COST PER UNIT.
• same activities required to produce local cost weights ALSO MEASURE EFFICIENCY.
• costing is the key to both efficiency and quality gains in a DRG environment.
• costing is essential – NOT optional – well recognised in Serbia – plan includes in 2016.
WHY LOCAL COST WEIGHTS?
DRG Workshop Belgrade, 18-22.November 2013.
Hospital Information SystemsHospital Information SystemsHospital Financial DataHospital Financial Data
Minimum Basic Data Set-DRG Data Entry Tool- Clinical Data, DRG- Resource Consumption Data
(analysis tool)
Costing engine
Coding Analysis Reports
Eg PICQ Software
Cost Reports
Cost Sheet-Allocation Statistics
(costfile)(volumefile)(CASES)
Data Analysis Reports
(preparecostsheet)
Diagnosis and procedures Analysis Reports
DATA WAREHOUSE
DRG Workshop Belgrade, 18-22.November 2013.
case study - hong kong
readiness for product costing
with reference to approaches adopted in other countries when first adopting DRGs
DRG Workshop Belgrade, 18-22.November 2013.
DRGs
Cost components:Ward medicalWard nursing
Non clinical salariesPathologyImaging
Allied HealthPharmacy
Clinical CareOperating rooms
Emergency departmentsSupplies
Special Procedure SuitesProsthesesOn-costs
HotelDepreciation
DRG Statistics:Cost Weights
Standard ErrorNumber of CasesNumber of Days
Average Length of StayAverage DRG Cost
DRG Workshop Belgrade, 18-22.November 2013.
• Built 10 years ago – established processes.• Some concerns about:-
– performance of the software functions and processes.– accuracy of the data – universal issue –
• needs iterative improvement feedback – USE THE DATA!!
– stakeholder acceptance of the data transformations.
• Category totals reconcile to expenditure totals.• Reporting well established and used for overall
performance assessment and reporting.
Current specialty costing process
DRG Workshop Belgrade, 18-22.November 2013.
15
GL
PharmaceuticalSupplies System(PHS)
EIS
LaboratoryInformationSystem(LIS)
RadiologyInformationSystem(RIS)
ManualRecords
HumanResourcesPayroll System(HRPS)
CostingCostingSystemSystem
PE cost workload statistics
Notional charges /allocation statistics
Drug cost
Activity Volume and Allocation Statistics
Cost (by cost centre aligned with Specialties)
System InterfacesSystem Interfaces Manual Data InputManual Data Input
workload statistics
Other Clinical/Non ClinicalSystems (e.g. OPAS, IPAS)
Relevant Statistics
HA Costing System – Data Flow HA Costing System – Data Flow
DRG Workshop Belgrade, 18-22.November 2013. 16
Average Cost per Patient Treated for 2006/2007 by Specialty by Cluster
Overall
Inpatient Specialties HKWC HKEC KCC KEC KWC NTEC NTWC Average$ $ $ $ $ $ $ $
Acute Care
Surgery 17,915 14,004 16,090 13,748 13,977 15,400 13,388 15,057
Medicine 12,930 9,943 13,771 11,582 10,395 10,481 9,794 11,102
Obstetrics & Gynaecology 10,247 10,935 10,441 12,489 10,029 10,501 11,998 10,745
Nursery 1,111 1,879 1,712 1,543 1,670 1,131 2,374 1,645
Orthopaedic & Traumatology 25,336 21,310 23,657 21,986 19,604 22,424 22,644 21,975
Paediatrics 24,994 14,577 16,593 11,534 11,914 15,481 16,061 15,077
Neurosurgery 37,005 26,257 43,091 - 33,435 19,894 35,742 31,956
Ear, Nose & Throat (ENT) 15,159 20,777 23,602 25,919 18,509 16,380 18,512 18,567
Ophthalmology 13,060 10,526 11,875 15,180 10,114 13,790 18,087 12,257
Psychiatry 68,914 52,866 72,966 113,499 68,970 50,706 90,641 66,137
Intensive Care Unit (ICU) 48,736 55,857 97,349 74,596 70,955 68,116 89,288 67,821
Clinical Oncology (ONC) 22,781 14,956 30,328 12,295 31,830 19,503 21,523
Total Acute Care (excl. ONC) 18,633 15,418 17,492 15,322 14,433 15,562 16,109 15,894
HA Specialty costing - output
DRG Workshop Belgrade, 18-22.November 2013. 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07
58.1%
Extended Care
A&E
SOPD
Day Hospitals
Community Care
14.1%
4.8%
18.8%
2.4%
1.8%
Inpa
tient
72.2
%
Acute Care
Am
bula
tory
26.
0%
56.2%
12.3%
4.8%
19.2%
5.4%
2.1%
Inpa
tient
68.5
% A
mbu
lato
ry 2
9.4%
HA Service Resource Utilization HA Service Resource Utilization ProfileProfile
DRG Workshop Belgrade, 18-22.November 2013.
Current HA casemix Current HA casemix costing methodologycosting methodology
HA Costing System – Data Flow HA Costing System – Data Flow
DRG Workshop Belgrade, 18-22.November 2013.
• The key strategy is to use local data to the maximum extent practical.
• Use specialty costing results and disaggregate at the patient level using length of stay.
The average cost per
patient day (using
specialty costing related
to a DRG)
X
The HA average length of stay (LOS) for that
DRG (average for HA)
=An average cost
relativity for each DRG for all of HA
Current casemix costing method
DRG Workshop Belgrade, 18-22.November 2013.
International experience• Should use as much local data as practical as
cost structure of each DRG varies between countries
HA’s approach
Use specialty costing results and HA length of stay (LOS)
Development of Cost WeightsDevelopment of Cost Weights
DRG Workshop Belgrade, 18-22.November 2013.
Clusters’ Average Cost per Patient Day by Specialty 06/07Clusters’ Average Cost per Patient Day by Specialty 06/07
DRG Workshop Belgrade, 18-22.November 2013.
318 BDO054101
AMI$2,581 x
8,142 BDO$7,657 x
2,424 BDO $48.1M $27,289
$32,250
434 BDO 054103
AMI w/MCC$2,581 x
3,474 BDO$7,657
x 683 BDO $19.5M $35,834
All DRGs $16B $13,753
Total Cost of
AMI DRGCost per Episode
233 BDO 054102
AMI w/CC$2,581 x
6,527 BDO$7,657 x
1,016 BDO $31.0M
1,764
961
543
1,075,401
No of Episode
Note: AMI - Acute Myocardial Infarction
DRG Med CCU Others
Development of Cost Weight for HA (using 06/07 data) - AMI as an IllustrationDevelopment of Cost Weight for HA (using 06/07 data) - AMI as an Illustration
DRG Workshop Belgrade, 18-22.November 2013.
Cost per Episode
Note: AMI - Acute Myocardial Infarction
054103AMI w/MCC
Average for All DRGs
Cost Weight for each DRG
Development of Cost Weight for HA (using 06/07 data) - AMI as an IllustrationDevelopment of Cost Weight for HA (using 06/07 data) - AMI as an Illustration
054102AMI w/CC
054101AMI
$35,834
$32,250
$27,289
2.6
2.3
2.0
$13,753 1.0
DRG Workshop Belgrade, 18-22.November 2013.
• Need for accurate cost weights ++
• Value for efficiency benchmarking +– Some interest in high level exception analysis.
• Relationship to quality and performance monitoring – –– not realised – or too hard for now.– quality program indicator focused rather than
protocol based – patient level service patterns therefore not of interest at this stage.
Stakeholder views on HA’s need for product costing
DRG Workshop Belgrade, 18-22.November 2013.
Availability of input data
Hospitals and clusters reporting capability
DRG Workshop Belgrade, 18-22.November 2013.
• Standard Chart of Accounts.
• Standardised use of cost centres – accrual.
• Degree of customisation – posting accuracy – management centre structure – cross subsidy - accountability for inconsistency.
• Relevance to internal hospital management processes, performance goals and issues.
Standardised financial reports
DRG Workshop Belgrade, 18-22.November 2013.
VOLUME STATISTIC WARD, UNIT DRG PATIENT
MEDICAL SERVICES +- - +
NURSING CARE + - -
PATHOLOGY - - +
IMAGING - - +
ALLIED HEALTH + - -
PHARMACY ? - +
CRITICAL CARE + - (days+?)
ORs, PROCEDURE SUITES
+ - +?
EMERGENCY DEPTS + - +
PROSTHESES, SUPPLIES
+ - +-
HOTEL SERVICES + - -
ON COSTS, DEPRECIATION
? ? ?
Standardised activity data
DRG Workshop Belgrade, 18-22.November 2013. 28
Type of Services Recommended Basis
Anaesthetic No. of sessions/ No. of anae procedure
Operating Theatre No. of sessions
Pharmacy (Drugs) Value of pharmaceutical items issued
Pharmacy (PE & OC) No. of items dispensed/ No. of beds
Pathology Weighted Workload
Diagnostic Radiology Weighted Workload
Medical Physics Weighted Workload
Allied Health Services No. of attendance
Private / Mixed Ward BDO/ No. of beds/ No. of admission
Allocation Basis – Clinical Patient Support
DRG Workshop Belgrade, 18-22.November 2013. 29
Type of Services Recommended Basis
Portering & Domestic Services
Average portering strength by service
Catering No. of meals/ BDO
Laundry & Linen BDO/ No. of Patient Treated
Medical Record Supporting Service
No. of Patient Treated/ No. of attendance
CSSD Value/ No. of CSSD items issued
Allocation Basis – Non Clinical Patient Support
DRG Workshop Belgrade, 18-22.November 2013.
• INFORMATION AVAILABLE ++ Administration, Electricity, Gas, Water,
Depreciation, EMSD, Building Maintenance & Depreciation for notional costs
• DATA QUALITY ??
• STANDARD DEFINITIONS +-
• STANDARD PROCESSES +-
• TECHNICAL CAPABILITY ++
Overhead allocations
DRG Workshop Belgrade, 18-22.November 2013. 31
Type of Services Recommended Basis
Administration Direct cost of specialty
Electricity, Gas, Water Floor Area
Depreciation Actual Depreciation by Department
EMSD Facility maintenance – Floor AreaEquipment maintenance – Asset Value
Building Maintenance & Depreciation for notional costs
Floor Area
Allocation Basis – Hospital Overhead
DRG Workshop Belgrade, 18-22.November 2013.
Understanding capacity to develop a centrally
operated product costing service
Data warehouse capability, capacity and use by clusters and hospitalsCosting skills and capacity to develop.
DRG Workshop Belgrade, 18-22.November 2013.
•Patient demographics•Inpatient episodes•Outpatient attendances•A&E attendances•Diagnosis, procedures•Laboratory results•Drug dispensing records•Radiology examinations•OT Records•Obstetrics information•Psychiatric information•Rehabilitation outcome
•Head counts•Payroll details•Drug expenditure
Useful Data Warehouse Components
DRG Workshop Belgrade, 18-22.November 2013.
• Data volume and size– 8.6m patient records– 69m inpatient, outpatient, A&E episodes– 860m laboratory results– 48m radiology examination reports– 340m dispensed drug items– 3.5 TB x 2 (Primary and Secondary
• Transaction Volume– 1.8m update transactions per day
Data Warehouse Statistics
DRG Workshop Belgrade, 18-22.November 2013.
Demographic•DOB, •age, •sex, •address, •family status, •income
Clinical•Diagnosis•Operations•Laboratory•Radiology•Problem list•Care plans
Activities•IP•SOPC•A&E•GOPC•Day Hospital•Community
Financial•Fees, •deposit, •payment,•subsidy/assistance.
•Cost: PE, OC, SFI, etc
Information architecture vision
DRG Workshop Belgrade, 18-22.November 2013.
• Cost data not used by hospitals – only for cost weights – – thus process not cost effective or accurate.
• Activity data problems – completeness and accuracy – (quickly resolves if used for benchmarking).– Staging rules – where the intermediate products are charged
- ? Patient – department allocation rules.
• Financial data problems– IFRAC, other product fractions – well developed in HA– GL posting idiosyncrasies – SCA use variations– Definitions of ‘in scope’
• Confrontational and defensive response to variations.
Difficulties and risks
DRG Workshop Belgrade, 18-22.November 2013.
• England - http://www.hfma.org.uk/NR/rdonlyres/03048E3E-16BE-4D9E-BC54-A16FAA61ADC2/0/AcuteHealthCCS20132014.pdf
• Australia – – http://www.ihpa.gov.au/internet/ihpa/publishing.nsf/Content
/Australia-Hospital-Patient-Costing-Standards.htm• User groups guidelines and health insurer standards.
– Eg German approach
International clinical costing standards