Estimates of patient costs related with population morbidity: Can indirect costs affect the results?

M. Carreras, Manuel García-Goñi, Pere Ibern, J. Coderch, L. Vall-Llosera and José María Inoriza

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: A number of health economics works require patient cost estimates as a basic information input. However the accuracy of cost estimates remains in general unspecified. We propose to investigate how the allocation of indirect costs or overheads can affect the estimation of patient costs in order to allow for improvements in the analysis of patient costs estimates. Instead of focusing on the costing method, this paper proposes to highlight changes in variance explained observed when a methodology is chosen. We compare three overhead allocation methods for a specific Spanish population adjusted using the Clinical Risk Groups (CRG), and we obtain different series of full-cost group estimates. As a result, there are significant gains in the proportion of the variance explained, depending upon the methodology used. Furthermore, we find that the global amount of variation explained by risk adjustment models depends mainly on direct costs and is independent of the level of aggregation used in the classification system.

Keywords: Patient costs; Clinical Risk Groups; Variation explained; Overhead allocation (search for similar items in EconPapers)
JEL-codes: B41 D24 I11 (search for similar items in EconPapers)
Date: 2009-01
New Economics Papers: this item is included in nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1138

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