What is the cost of getting the price wrong?

Beck, Eduard J. and Beecham, Jennifer and Mandalia, Sundhiya and Griffiths, Rachel and Walters, M.D. Sam and Boulton, Mary and Miller, Daniel (1999) What is the cost of getting the price wrong? Journal of Public Health Medicine, 21 (3). pp. 311-317. ISSN 0957-4832. (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

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Background The objective of this study was to compare differences in cost estimates for paediatric HIV hospital service provision based on hospital prices with cost estimates obtained through a research-based service-specific costing exercise. Methods Activity data on the use of hospital services of children by stage of HIV infection were collected from case-notes for 118 HIV antibody positive children, managed at St Mary's Hospital NHS Trust, London, 1 January 1986-31 December 1994. Hospital unit prices were obtained from the Hospital Trust Finance Department; unit cost estimates were obtained from relevant hospital departments through a research-based service-specific costing exercise. Financial data related to the 1993-1994 financial year, and were indexed to 1995-1996 prices. The main outcome measures were cost estimates per patient-year by stage of HIV infection. Three cost scenarios were calculated: first by linking activity data with hospital prices (Trust Prices); second by linking activity data with routinely available hospital prices plus units costs from the costing exercise where no relevant hospital prices existed (Supplemented Trust Prices); third, by linking activity data exclusively with unit costs from the hospital-specific costing exercise (Unit Costs). Results There were substantial differences between unit cost estimates per patient-year based on Trust Prices and Supplemented Trust Prices compared with those based on Unit Costs. Differences increased with more intense use of services. The deficit based on Trust Prices compared with Unit Costs ranged from pound 432 per patient-year for HIV negative children, pound 574 for asymptomatic HIV-infected children, pound 1288 for indeterminate children, pound 1814 for children with symptomatic non-AIDS to pound 7418 per patient-year for children with AIDS. Conclusions In this hospital, reliance on generic hospital prices to derive cost estimates for paediatric HIV services produced considerable underestimates of the cost of service provision compared with data derived through the costing exercise. If this occurs across all or most areas of service provision, this can lead to substantial financial deficits, which in turn may mean that the needs of specific client populations may not be met.

Item Type: Article
Uncontrolled keywords: costing studies; hospital prices; specialist services; paediatric HIV infection
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > School of Social Policy Sociology and Social Research
Depositing User: M. Nasiriavanaki
Date Deposited: 13 Jul 2009 08:09
Last Modified: 08 May 2014 15:29
Resource URI: https://kar.kent.ac.uk/id/eprint/17062 (The current URI for this page, for reference purposes)
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