Cost accounting supports clinical evaluations

Healthcare Financial Management, April, 1994 by Caryl E. Carpenter, Linda C. Weitzel, Nelda E. Johnson, David B. Nash

Although Zofran costs significantly more than traditional therapy, physicians at TJUH felt that patients tolerated their chemotherapy better when they received Zofran. They argued that the benefits of Zofran might include lower total costs if length of stay was reduced. The CFMS system was used to evaluate this hypothesis.

The CFMS system identified three groups of patients for the cost analysis. Patients in all three groups were those who had been admitted for maintenance chemotherapy over the same time span. (A one-year time frame from six months before to six months after Zofran first became commercially available was selected.)

The first group (ALWAYS) was patients who received Zofran during all of their admissions during the time period. The second group (NEVER) was patients who never received Zofran during an admission in that time period. The third group (BOTH) was patients who received Zofran on at least one admission but not all admissions.

Exhibit 2 compares costs and utilization statistics for the ALWAYS vs. NEVER groups. No statistically significant difference in the average cost per case for the ALWAYS group vs. the NEVER group was found, despite the fact that anti-emetic therapy for the ALWAYS group was 10 times more costly than for the NEVER group.

The high cost of Zofran for the ALWAYS group was offset by a reduction in average length of stay (2.3 days vs. 3.4 days). This difference in length of stay was significant at the 5 percent level. As the exhibit shows, the ALWAYS group also had lower utilization of various ancillary services.

Exhibit 3 shows the distributions of payer mix and cancer type for the ALWAYS vs. NEVER groups. Statistical tests confirmed that the two groups were not similar in terms of cancer site or payer. By comparing Medisgroup severity scores, it was determined that the two groups were comparable in terms of severity of illness. However, the differences in cancer site and payer mix might explain the differences in resource use observed.

TABULAR DATA OMITTED

Exhibit 3: Payer mix and cancer site distribution comparison of DRG 410
admissions (10/90-9/91)

                           Never received   Always received
Cancer site distribution       Zofran            Zofran

Bone and tissue                7.48%             4.41%
Colorectal                     3.74%             2.94%
Female genital                 4.67%             7.35%
Gastrointestinal              16.82%            13.24%
Leukemia/lymphoma             16.36%             4.41%
CNS                            0.50%             4.41%
Respiratory                   28.04%            39.71%
Skin                           2.80%             0.00%
Urinary                        3.27%             0.00%
Head and neck                  0.00%             2.94%
Other                          9.81%            20.59%
Unknown                        6.54%             0.00%

Payer mix distribution

Blue Cross                    27.10%            41.18%
Commercial                    16.82%            20.59%
Managed care                   4.67%             4.41%
Medicaid                       2.34%             2.94%
Medicare                      43.00%            29.41%
Healthpass                     1.40%             0.00%
Self                           0.00%             1.47%
CHAMPUS                        1.40%             0.00%
Unknown                        3.27%             0.00%