Government of Kerala. Costing Study for Designing Payment for Service Providers. Department of Economics. Government College of Kasaragod, Kerala

Transcription

1 Government of Kerala Costing Study for Designing Payment for Service Providers Department of Economics Government College of Kasaragod, Kerala Hospital Costing Study Workshop 8 th & 9 th September, 2012 Kasaragod, Kerala Supported By Joint Leaning Network Report Drafted By: Dr Santosh Kumar Kraleti Mr Hari Kurup Ms. Sireesha Perabathina - 1

2 Executive Summary A two day orientation and sharing workshop was organized by the Hospital Costing Study Unit, Department of Economics, Government College of Kasaragod, Kerala on 8 th & 9 th September, 2012 with approximately 30 participants. The objectives of the two day workshop was to disseminate the objectives of the costing study among the team members identified in Kerala, disseminate the concepts of costing and rate fixation within different health insurance schemes in the Indian context, to familiarize the project team with the data collection tools, templates used by Aarogyasri Health Care Trust (AHCT), Andhra Pradesh (A.P.) costing team and to learn and understand the challenges faced by the AHCT, A.P. costing team during the sample study. Discussion on the importance of such costing studies and how various schemes vary in rates for different procedures were done. It was concluded that there seems to be no scientific evidence behind the rate setting for most of the schemes and is driven through negotiations and lobbying. There might be other factors responsible for the variances such as the prices of drugs and diagnostics that are dynamic, infrastructure of facilities with high standards and quality with escalating costs for same procedures. Paying for variances: complications, comorbidities, geographical location of hospitals-urban and rural divide is very difficult to account for and incorporate into the package rates but important. Sampling of the hospitals have to represent tier 1/2/3 hospitals. Sampling and piloting for one year is essential for calculating Unit costs and to get a holistic picture of the expenses and the response from the healthcare providers (e.g. changes in service patterns). The main components comprising the costing study include departmental unit costs and package costs for procedures which were discussed in detail with the sample data collected by AP costing team. Dr Santosh shared and elaborately explained the different direct cost, indirect cost and patient cost centers and methodologies used for allocation of overhead costs through step down and also the possible allocation statistics for all Overhead & Ancillary (indirect) Cost Centers/departments. He also shared the different tools and templates designed by him to give an overview of the information captured. Hospital costing accounts for calculating Unit Costs for each of the services provided in the Hospital s Individual Departments, be it Patient Care Centers or Overhead & Ancillary Care Centers and also accounts for Hospital Efficiencies. Procedural costing accounts for calculating the average costs for all the cases of that specific procedure in that particular hospital considering the Average Length of Stays (ALOS) in each of the Patient care centers and the different services rendered for that procedure. The motivated costing team from AHCT, AP shared their action plan used for their sample costing study, different data collection methods and day to day operations dealing with the challenges faced by the team. Kerala costing team has been suggested for an orientation to familiarize them to the medical know how s and medical terminologies and procedures as most of the field staff are from economics background. Though the calculation of Hospital Unit Costs - 2

3 and Procedural Costs require lot of assumptions and hence need to consider % of error in making those assumptions and arrive at a reasonable scientific analysis for taking assumptions. Kerala and AP discusses that it may be of interest to pool a panel of hospitals for a sizeable amount of sample hospitals and can compare efficiencies between hospitals across states in the near future. Kerala costing study team will be undergoing an orientation week to familiarize the team with medical terminology and costing and provider payment systems. Kerala is also interested in understanding the packages from Yashasvini Scheme, Karnataka, especially for procedures with costs >= 10,000 INR. Kerala team highly appreciated the contribution from AP and this two days workshop was very useful for Kerala to better prepare for the costing study. AHCT team has offered to provide technical or coordination support to the Kerala costing team. Introduction In continuation to the JLN costing collaborative under the Joint Learning Network Provider Payment Mechanism Technical Track in Bangkok, Thailand, Government of Kerala decided to initiate a costing study for setting up a provider payment mechanism in the health care sector of Kerala. As per directions by the Government of Kerala, Mr. Hari Kurup K K has been nominated as the State Coordinator of the costing study for Kerala to set up a hospital costing study unit- Costing Study for Designing Payment to Service Providers- at the Department of Economics, Government College of Kasaragod. The study team comprises of a research assistant, a data entry operator, an administrative staff, two field supervisors and four field investigators under the direct supervision of Mr. Hari Kurup. The broad objective of this two day workshop was to orient the appointed staff to the costing study done in the state of Andhra Pradesh (AP) by the AHCT costing team lead by Dr.Santhosh Bharadwaj Kraleti & to discuss data collection tools and templates, understand the challenges foreseen by the AP costing team and seek inputs for the upcoming costing study in Kerala. The workshop was organized on 8 th & 9 th of September, 2012 at Kasaragod, Kerala with approximately 30 participants including project staff for the costing study, resource persons from Aarogyasri Health Care Trust (AHCT), Hyderabad and Gulati Institute of Finance and Taxation, Thiruvananthapuram and staff from the Department of Economics, Government College of Kasaragod. The specific objectives of the two day workshop were to: To disseminate the objectives of the costing study among the team members Disseminate the concepts of Universal Health Coverage (UHC) and Health Systems (HS) in the Indian context to costing study team. To familiarize the project team with the data collection tools and to equip the project team with collection of financial and patient based data from public and private hospitals Mr. Hari Kurup, State Coordinator, Costing Study, Kerala welcomed the resource persons and the new costing team for this orientation and experience sharing workshop. - 3

4 Discussion Rate Fixation - Government Sponsored Health Insurance Schemes in India Dr. D. Narayana, Director, Gulati Institute of Finance and Taxation, Thiruvananthapuram lead the discussion on why is costing necessary for designing the right package in Kerala. With the emerging financial protection through various healthcare insurance schemes, premium payments are key to any schemes which are dependent on the rates for packages especially when the incidence of hospitalization in Kerala is high compared to any other state in India. If rates are too low then providers may not come forward and if the rates are too high, it raises sustainability issues. Variations are enormous between different schemes in India; both the number of procedures differs and there is huge variation in the rates for similar procedures. It is important to assess the methodology behind setting the rates. RSBY Plus in Kerala has 1,034 procedures of which 297 are newly added procedure in When compared for rates for the previous year, there was no change in the rates for 464 old procedures, rates decreased for 11 procedures. Rates for 46% of the total procedures within the >=10,000 INR category have increased >= 50% in the last one year. Procedures with low rates account for less proportion and procedures with high rates have bigger proportion in Kerala. It is assumed that the rates are set through negotiations and not based on any scientific methodologies to arrive at a rate for a certain procedure. This trend of increase in rates is almost similar to any other rates in the country for other schemes. The rate variances might not be entirely responsible due to lobbying and negotiation but, may have some effect due to changes in the drug and diagnostic prices. Medical Supply Corporation plays a key role in the variance of rates in the packages and is important to have such benchmarks for setting rates and fixing packages. Methodologies, Templates & Tools used and Experiences from sample Hospitals and Procedural Costing by Aarogyasri Health Care Trust (AHCT) Dr. Santosh Bharadwaj Kraleti, Deputy Executive Officer, AHCT, Hyderabad and his team leads for the costing study for two of the four sample hospitals in the state of AP shared their experiences from the costing study and the different methodologies, tools and templates used by the team for hospital system costing and procedural costing. Under supervision of Dr Santosh and Dr.Chitralekha from AHCT the costing study for two sample hospitals were completed and two more are in the pipeline. Dr.Santosh reiterated that there are huge amount of variances between schemes rates not only because of lobbying but also due to infrastructure, empanelment criteria, medical equipment and - 4

5 more so the overhead costs. For example facilities providing certain diagnostics such as high-end cathlabs and other super-specialty services would cost more than a used/second hand cathlab and these variances have to be accounted for in the rate setting. It is also noteworthy that though some centers may have robotic surgery equipment or other state of the art technology where in the cost-benefit analysis has not been done and is totally based on reports or research driven by the manufacturers or pharmaceutical companies. Alongside it is also important to ascertain standards which the hospitals follow while paying for packages such as hospitals using better quality of drugs and consumables could be reducing complications and readmissions for the patients. Orthopedic, Neurosurgical or any implant for that matter has to be ascertained based on its quality. There are for example facilities using stainless steel implants which restrict the patients from undergoing an MRI for the rest of their lives. It is important to understand the market value of expenses for any procedure to bring about the real picture of expenses for a facility and also helps to get the right information from the hospital administrators. Sampling of the hospitals has to be accounted with the distribution of tier 1/2/3/ levels. Sampling and piloting for one year is essential for calculating costing as otherwise it wont give a big picture of the expenses of the facility accounting for taxes, municipal fees, seasonality variances etc. When calculating hospital costing for constants one should account for 20% of overheard costs 20% - 25% of pharmacy and 20% of operation theatre expenses. Hospital costing for constants has to account for efficiencies and arrive at unit cost. Procedural costing accounts for standards to prevent moral hazards and also calculate the average length of stay (ALOS). Paying for variances, complexities, comorbidity, geographical location of hospitals and urban and rural setups is very difficult to account into the package rates. The main components comprising costing include departmental unit cost and package cost for procedures. Costing cannot be entirely based on profit and loss (PL) sheets as most of the time they are manipulated for tax benefits in private facilities. On the other hand the public facility doctors are mostly on deputation and may be drawing salary from a different department while he is assigned for another department. It is also difficult to calculate costing especially in cases of malpractices where there is no account for expenses in the PL sheets. Though charging referral expenses is unethical, some of the costing studies account for referral expenses and some don t so it depends on the state whether they want to account for referral expenses in the given PL sheets. Dr Santosh explained the different components of cost centers in a facility. He elaborately explained the different direct cost, indirect cost and patient cost centers in a facility that is essential to define before starting a costing exercise. Direct costs from the PL sheet for each line item department wise have to be split based on assumptions. Indirect costs are allocated through step down costing or simultaneous equations for each department. Dr Santosh explained the step - 5

6 down costing on hypothetical figures and also shared data collected from Kamala Hospital, Hyderabad to explain the methodology and also explained the allocation of overhead costs to all ancillary (indirect) and patient care departments based on each allocated proportion of total expense. He also shared the different tools and templates used by the costing team at these four hospitals to give an overview of the information captured by the costing team in detail. Overhead allocation expenses proportion for each department = Actual expense of the department / (Total expense of the hospital Total overhead expense) * 100 Average length of stay = Total number of bed days/ total number of patients For calculating costs in pharmacy, if itemized billing for consumable items is not available, 30% of the total sales in the pharmacy as an assumption for the cost of the drugs/consumables is deducted. For accounting for deprecation of equipments if the year of purchase and bills are not available, assumption has been taken at AHCT that the equipments were 4 years old even though they might have been older than four years or otherwise as the mode of the year of establishment of most of the hospitals was in Per Procedure Cost = ALOS in In-Patient *Cost per IP Bed Day + ALOS in Intensive Care Unit *Cost per ICU Bed Day + ALOS in SDW*Cost per SDW Bed Day+ ALOS in Post Operative Ward*Cost per POW Bed Day +ALOS Surgery*Cost per Operation Theatre mins + Pharmacy & Consumable Cost* + Lab & Diagnostics Cost * Sum of Cost of pharmacy & consumable for the all the cases of the specific procedure and average it out The team leads from AP costing study Dr Pooja Verma and Dr Sandeep Singh who where heading a 14 member team for two private hospitals, Vasavi and KIMS Hyderabad, presented the practical nuances of their experience. The team underwent a two weeks orientation training before they started the costing study in December, They were provided the technical know how of the costing, basics of costing and pricing and were introduced to tools and templates to be used by the team. This highly motivated costing team followed an action plan for the sample costing study at three hospitals. The team was introduced to the hospital for collecting medical data and other capital and operations costs from the PL sheets. There were many challenges along the way such as getting permissions for data collection, getting case sheets from different staff members was difficult, getting office space within the hospitals for the team to work together and cooperation from the junior staff for getting the accounts data. Other challenges were in analysing the technical data where lot of assumptions were made to decide on taking the right figures into account. - 6

7 Conclusion Andhra Pradesh has successfully completed the costing study with three hospitals and has developed various tools and templates which can be used as a base for tweaking the tools and templates developed by Kerala. The main feedback for Kerala to work on the costing study team is that they require supervision from someone with medical know how and the team needs to be oriented with different medical terminologies and procedures as most of the field staff comprises of people from economics background. Given the complexity and variance in the rates for procedures and negotiations and assumptions made while setting a package, it couldn t be ignored that there is need for identifying providers who are ethical and transparent to drive the practical and authentic rates in the market. It is important to account for the unavoidable assumptions while calculating the unit and procedural costs and also to assess the % of error possible especially in the salaries and in the other expenses. It is vital to have a sizable sample to come up with conclusions. It may be of interest to pool a panel of hospitals for a sizable amount of sample hospitals and can compare efficiencies between hospitals in Kerala and AP in the near future. Next steps Kerala costing study team will be undergoing an orientation week at a private clinic in Kasaragod. As part of the orientation, Mr Hari will be taking a session on the basics of costing and pricing with the team for bringing the team at one level of understanding with the calculations for the costing study. Kerala has identified 15 Hospitals for the costing study in with a mix of both public and private facilities across different bed size classes. Once a sample pilot study is conducted with a minimum of 2-3 facilities, the team might want to relook at the templates and tools adopted and compare with Andhra Pradesh. Kerala is also interested in understanding the packages from Yashasvini Scheme, Karnataka, especially for procedures with higher costs >= 10,000INR. AHCT team is open to provide technical or coordination support to the Kerala costing team and have explored coordination options for connecting with each other through teleconferences in the next coming months once the costing study in Kerala kicks in. - 7

8 Annexure I Agenda Day 1 (Saturday, September 8) 9:30-9:45 Opening remarks: Mr. Hari Kurup, State Co-ordinator, Hospital Costing Study, Kerala 9:45-10:00 Introduction 10:00-10:15 Tea 10:15-11:15 Session I: Rate Fixation under Government Sponsored Health Insurance Schemes in India - Dr. D. Narayana, Director, Gulati Institute of Finance and Taxation, Thiruvananthapuram 11:15-11:30 Discussion 11:30-12:30 Session II: Costing methodologies adopted for Hospital System Costing - Dr. Santosh Bharadwaj Kraleti, Aarogyasri Health Care Trust, Hyderabad. 12:30-12:45 Discussion 12:45-2:00 Lunch 2:00-3:00 Session III: Costing Templates & Tools used by AHCT for Procedural Costing Hands on experience - Dr. Santosh Bharadwaj Kraleti, Aarogyasri Health Care Trust 3:00-3:15 Tea 3:15-4:00 Group Work 4:00-7:00 Closing Day 2 (Sunday, September 9) 9:30-10:30 Session IV: Practical nuances in Hospital costing, Dr. Santosh Bharadwaj Kraleti, Dr. Pooja & Dr. Sandeep Singh 10:30-10:45 Discussion 10:45-11:00 Tea 11:00-12:00 Group work 12:00-12:30 Way Forward/Closing 12:30 Lunch II Participant List 1. State Coordinator, Costing Study, Kerala - Mr. Hari Kurup 2. Resource Persons Dr. D. Narayana, Director, Gulati Institute of Finance and Taxation, Thiruvananthapuram Dr. Santosh Bharadwaj Kraleti, Deputy Executive Officer Aarogyasri HCT, Hyderabad Dr Pooja Verma & Dr Sandeep Singh Interns at Aarogyasri Dr. Suresh Kumar and Mr. Satheesha, RSBY 3. Field Staff (Trainees): Supervisors and Investigators 4. Project Staff : Research Assistant, Data Entry Operator, Accountant and Office Assistant 5. Facilitation Committee Mr. A.L Ananthapadmanabha Dr. Mercy Joseph Dr. G Ajayakumar Mr. Shinto M Kuriakose Mr. U. Balakrishnan - 8 Mr. Manoj Chathoth Dr. AV. Samritha Ms. Usha P Mr. Shiva Prasad

9 III Feedback All the participants believed that this workshop was a great learning experience for them and to think through the practical nuances of the costing study they will be doing in the coming weeks. All the presentations by AHCT and Dr Narayana from the Gulati Institute gave a big picture of the work the team will be planning and executing. The most useful sessions were sharing the practicalities of Costing Methodology and data collection methods by Dr Santhosh from Aarogyasri HCT and experiences of the AHCT costing team and interaction between the presenters and the audience was very helpful. Most of the field staff requested for an orientation training on medical terminology and familiarization with the hospital departments and different procedures. The motivation provided by the AP team was immense and gave lot of confidence to plan the costing study. The sessions could have been longer to understand the specifics of the calculations and intricacies of capital costs, depreciation, direct costs, indirect costs, overhead costs, ancillary costs, stepdown, ABC costing for procedural/package costing There must be specific training on Tools for Hospital & Services Unit Costs after narrowing down and standardization of tools. Once the Hospital & Service Unit costs are arrived at and the Kerala Govt. decides upon Costing for Procedures/Package pricing they can also train the field staff on the specific tools for Procedural Costing. Data analyzing team must be separate from data collection team. The data analysis team must have the knowhow of the whole costing exercise. The data collection team can just collect the crude data available and the Data analyzing team can give necessary support. For procedural Costing or Package Costing the team will require medical knowhow, probably need more staff nurses/paramedics on roles to collect, consolidate, clean and analyze the data. - 9