Cost accounting supports clinical evaluations

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

An analysis of a subgroup of patients with the same type of cancer would reduce any disease-related variation; the largest group was made up of patients with respiratory cancer. The analysis was repeated for this subgroup and the results showed that the ALWAYS group still had shorter lengths of stay, resulting in no significant difference in total cost per case between the ALWAYS and NEVER groups.

It was noticed during the analysis that a large number of patients in the NEVER group was admitted by one physician and that this physician's patients had longer lengths of stay than those for other physicians. The analysis was repeated, excluding this physician's patients.

The length of stay was still significantly lower for the ALWAYS group, although the absolute difference between ALWAYS and NEVER was less than it was in the original analysis. The length of stay within the respiratory cancer TABULAR DATA OMITTED TABULAR DATA OMITTED group, however, was not significantly different. This part of the analysis suggests that physician practice patterns are an important factor in explaining the shorter lengths of stay for Zofran patients. Unfortunately, the sample size was too small to repeat the analysis by physician.

The next part of the analysis focused on the group of patients in DRG 410 who had at least one admission with Zofran and others without Zofran (BOTH). Their admissions with Zofran (WITH) were compared to their non-Zofran admissions (WITHOUT). This comparison was done to minimize any effects that might be due to differences in cancer site, severity, or physician practices. The results are summarized in Exhibit 5.

As shown in the exhibit, there was a slightly shorter length of stay for those admissions where Zofran was used, but the difference was not statistically significant. As in the other analyses, the average cost-per-case was not significantly different for the WITH vs. WITHOUT admissions despite the higher cost of Zofran.

It is concluded that the introduction of Zofran at TJUH did not result in a significant increase in total hospital costs because many patients who received Zofran had shorter lengths of stay. This is an important finding for institutions where reimbursement for chemotherapy patients is on a fixed rate, per case basis.

Future applications

The results of this study were shared with the TJUH pharmacy and therapeutics committee and illustrate how the CFMS system could be used for a variety of clinical-economic analyses. The number of requests for CFMS system data, particularly from physicians, nurses, pharmacists, and other clinicians, has grown steadily as more and more departments realize the potential to utilize this information to evaluate their clinical practices.

As the number of new products grows, and cost containment pressures increase, the need for clinical cost evaluations also will increase.(f) Good cost accounting systems will help hospitals access better, more reliable cost data for the type of analysis described here.