July 24, 2013
NEW DELHI (July 24, 2013) – A new study appearing in PLOS ONE, by researchers from the Center for Disease Dynamics, Economics & Policy (CDDEP), takes a groundbreaking look at the cost of health care from an operational standpoint. It is a comprehensive accounting of the cost of medical services in Indian hospitals, based on data from five hospitals across India from April 2010 to March 2011. The hospitals represent the range of sizes and types common in India, including both public and private hospitals in urban, semi-urban, and rural areas.
At the least expensive hospital, an outpatient visit cost Rs. 94 less than two dollars and at the most expensive it was Rs. 2,213 about $35. An inpatient day cost from Rs. 345 (about $6) to Rs. 6,996 (about $120). These figures are derived from hospital activity and accounting records, and include the costs of labor, drugs and medical supplies, maintenance, utilities, and administrative costs. The researchers also determined the cost of surgery, laboratory tests, and emergency room visits for each hospital.
In a related study published last month in BMJ Open, CDDEP researchers estimated the costs of twelve commonly performed surgical procedures in the same five Indian hospitals. The study found that, with some variation, the estimated costs were consistent with reimbursement rates under Rashtriya Swasthya Bima Yojana (RSBY), India s government-sponsored health insurance scheme that currently covers 32.4 million poor families. These findings and similar future research could be used to fine tune RSBY reimbursement rates as well as payment structures within hospitals.
Having robust information on the cost of medical care is essential to shaping better public health policy in India, said Ramanan Laxminarayan, director of CDDEP and the lead author of both studies. Such knowledge can also help hospital administrators improve the efficiency of their facilities.
According to research conducted by the World Bank, hospitals account for 50 to 80 percent of public sector health spending in low- and middle-income countries.
A significant measure of hospital efficiency is the bed occupancy rate, which was reported for each hospital in the PLOS ONE study. According to the World Health Organization, an 80 percent occupancy rate is the threshold for acceptable efficiency. With the exception of one hospital, none of the study hospitals achieved this benchmark, with some rates falling as low as 42 percent.
A shortage of nursing staff was also cause for concern in most of the hospitals studied. Only one met the recommended 2:1 nurse-to-doctor ratio, a situation that could have significant impact on the quality of care.
Insights gleaned from this research have the potential to yield cost savings for hospitals, while laying the groundwork for even larger studies that could be used to inform public health policy (e.g., setting reimbursement rates for government-financed health insurance plans and planning for universal health care). Conducting those studies will be the next step in creating a modern, data-driven health care system for the developing world.
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