Estimating the unit costs of public hospitals and primary healthcare centers.

BACKGROUND: Many factors have affected the rise of health expenditures, such as high-cost medical technologies, changes in disease patterns and increasing demand for health services. All countries allocate a significant portion of resources to the health sector. In 2008, the gross domestic product of Palestine was estimated to be at $6.108bn (current price) or about $1697 per capita. Health expenditures are estimated at 15.6% of the gross domestic product, almost as much as those of Germany, Japan and other developed countries. The numbers of hospitals, hospital beds and primary healthcare centers in the country have all increased. The Ministry of Health (MOH) currently operates 27 of 76 hospitals, with a total of 3074 beds, which represent 61% of total beds of all hospitals in the Palestinian Authorities area. Also, the MOH is operating 453 of 706 Primary Health Care facilities. By 2007, about 40 000 people were employed in different sectors of the health system, with 33% employed by the MOH. AIM: This purpose of this study was to develop a financing strategy to help cover some or all of the costs involved in operating such institutions and to estimate the unit cost of primary and secondary programs and departments.
METHODS: A retrospective study was carried out on data from government hospitals and primary healthcare centers to identify and analyze the costs and output (patient-related services) and to estimate the unit cost of health services provided by hospitals and PHCs during the year 2008. All operating costs are assigned and allocated to the departments at MOH hospitals and primary health care centers (PPHCs) and are identified as overhead departments, intermediate-service and final-service departments. Intermediate-service departments provide procedures and services to patients in the final-service departments. The costs of the overhead departments are distributed to the intermediate-service and final-service departments through a step-down method, according to allocation criteria devised to resemble as closely as possible the actual use of resources by each of the departments. The data were analyzed using spss. Data cleaning was carried out by cross-validating the results through conducting cross-tabulations between the hospital/center and section/program to identify errors from the data collection or entry process. Depreciation of assets and the consumption of capital costs are ignored in this study, as it is difficult to evaluate the MOH facilities owing to a lack of recording of depreciation of assets or other costs of servicing capital assets.
RESULTS: Inpatient costs contributed about 75% of all costs, whereas outpatient services contributed the remaining 25% of total costs. The average cost per visit was $13.00 for outpatient departments, whereas the average cost per patient day for inpatient departments was $90.00. As for the unit cost for each department, intensive care unit and intermediate care unit services were the highest among all categories of daily hospital services ($208.00). This is in contrast to surgical operations ($124.00), specialized surgeries ($106.00), delivery department ($99.00), orthopedics ($98.50) and general surgery ($85.00). The lowest unit cost was found in the neonatology department ($72.00). In PHCs, the unit cost per visit was highest for psychiatry programs ($26.00), followed by other programs ($21.50), chronic diseases ($21.00), maternal and child health ($11.50), preventive programs ($9.00) and general medicine ($6.50). The exchange rate listed by The Wall Street Journal as of Wednesday August 25, 2010 is 1 US dollar = 3.82 new Israeli shekel (NIS).
CONCLUSION: The findings have implications for policy and decision making in the health sector in Palestine concerning the cost of services provided by hospitals and PHCs. The availability of a standardized data set for cost assessment would greatly enhance and improve the quality of financial information as well as efficiency in the use of scarce resources.