What is a hospital bed day worth? A contingent valuation study of hospital Chief Executive Officers
Page et al. BMC Health Services Research
What is a hospital bed day worth? A contingent valuation study of hospital Chief Executive Officers
Katie Page 0
Adrain G. Barnett 0
Nicholas Graves 0
0 Institute of Health and Biomedical Innovation, Queensland University of Technology , 60 Musk Avenue, Kelvin Grove, Qld 4059 , Australia
Background: Decreasing hospital length of stay, and so freeing up hospital beds, represents an important cost saving which is often used in economic evaluations. The savings need to be accurately quantified in order to make optimal health care resource allocation decisions. Traditionally the accounting cost of a bed is used. We argue instead that the economic cost of a bed day is the better value for making resource decisions, and we describe our valuation method and estimations for costing this important resource. Methods: We performed a contingent valuation using 37 Australian Chief Executive Officers' (CEOs) willingness to pay (WTP) to release bed days in their hospitals, both generally and using specific cases. We provide a succinct thematic analysis from qualitative interviews post survey completion, which provide insight into the decision making process. Results: On average CEOs are willing to pay a marginal rate of $216 for a ward bed day and $436 for an Intensive Care Unit (ICU) bed day, with estimates of uncertainty being greater for ICU beds. These estimates are significantly lower (four times for ward beds and seven times for ICU beds) than the traditional accounting costs often used. Key themes to emerge from the interviews include the importance of national funding and targets, and their associated incentive structures, as well as the aversion to discuss bed days as an economic resource. Conclusions: This study highlights the importance for valuing bed days as an economic resource to inform cost effectiveness models and thus improve hospital decision making and resource allocation. Significantly under or over valuing the resource is very likely to result in sub-optimal decision making. We discuss the importance of recognising the opportunity costs of this resource and highlight areas for future research.
Bed days; Valuation; Willingness-to-pay; Cost effectiveness
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Background
An effective and efficient hospital-based program will
simultaneously both improve patient outcomes and
decrease hospital length of stay. Decreasing length of stay
and freeing up, or releasing of hospital beds, represents
a cost saving. However, the magnitude of this cost saving
is difficult to quantify and is likely to depend on many
factors. Hospital beds can have two types of value: (1)
how much they cost the hospital to run – the
accounting cost (referred to as the hotel cost by the WHO [1]),
and (2) the value they have in terms of achieving desired
outcomes – the economic (or opportunity) cost.
Previous cost-effectiveness analyses most often use the
accounting cost of some variant of it [2]. This is
predominantly because it is an easier value to calculate
and to understand, especially by hospital administrators.
The question that arises is to what extent this is the
“right” value to be adopting? Arguably, the second value,
the economic cost, is the real value we “should” be
interested in. This is because the majority of bed costs are
fixed and sunk costs, and therefore the “true” value of
releasing a hospital bed is better captured by the extent
to which it allows one to achieve other outcomes that
the hospital desires, such as treat another patient, reduce
waiting lists, and ultimately meet economic targets. An
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accounting value fails to represent economic opportunity
costs, rather accounting conventions are used to recover
historical expenditures. WTP may be closer to the
economic opportunity cost, and that opportunity cost is a
basis for decision making, the efficiency of which is the
subject of welfare economics. The true economic value
of a bed day is probably lower than the full financial
accounting cost. The question is, how much lower?
Previous cost-effectiveness research [3] has shown that
the dollar value placed on a hospital bed, average cost
versus just consumables, is important. Sensitivity
analysis around the bed day value demonstrated that it had
a significant impact on the overall decisions derived
from the cost effectiveness model. Bed day values often
drive the cost saving (...truncated)