Cost Analysis of Nursing Care

Afza.Malik GDA

Nursing Care and Cost Analysis

Cost Analysis of Nursing Care

Cost Analysis And Purposes,Cost Analysis and Nursing Research ,Purposes of Cost Analysis,Cost Analysis As Administrative Research,Characteristics of Cost Analysis,Area of Dispute In Cost Analysis,Growth of Capitation In Cost Analysis.

Cost Analysis And Purposes

    Cost analysis of nursing care reflects a body of administrative studies that focus on quantifying nursing costs needed to deliver care to individual clients or aggregates in a variety of settings, employing a variety of practice models and analysis tools. 

    All cost analysis is based on assumptions that must be examined and made explicit when reporting findings (Friedman, De La Mare, Andrews, & Mc- Kenzie, 2002).

Cost Analysis And Nursing Research 

    Much of the research on cost analysis of nursing care has focused on "costing out" nursing services for the purpose of measuring productivity, comparing costs of various nursing delivery models, charging individual patients for true nursing costs, and relating nursing costs to other cost models, most notably Diagnostic Related Group (DRG) categories. 

    The need and motivation for these costing efforts have evolved with the economic underpinnings of the health care system, as have the methodologies and setting focuses. For example, most studies in the 1980s were performed in acute-care hospitals, whereas more studies now relate to other settings.

Purposes of Cost Analysis

    Today, cost analysis of nursing care focuses on justifying the cost effectiveness of professional practice models, evaluating re- design efforts, and monitoring and controlling nursing costs within an ever-tightening. 

    Cost-conscious health care environment. Within the context of rising capitation penetration, cost analysis is essential to accurate capitation bidding and financial viability of the parent organization. As "best practices" bench marking pushes the envelope of competitive bidding, demonstrating cost-effective nursing practice becomes essential to securing managed care contracts.

Cost Analysis As Administrative Research

    Cost analysis research is a type of nursing administrative research that evaluates aspects of the delivery of nursing care. More recently, this type of research has been performed in a multidisciplinary fashion under the broader rubric of health services administration research.

  Cost analysis studies always have been relevant to decision making by nursing administrators in selecting delivery models, treatment protocols, and justifying budgets; but such studies may become central to the survival of the entire profession for the future. 

    As cross- trained, unlicensed assistive personnel (UAPS) proliferate, nurse administrators must struggle to support the cost-effectiveness of professional nursing practice. Larger questions of appropriate skill mix cannot be determined solely on a cost per hour of service, cost per case, or cost per DRG basis. 

    New studies are needed that will combine traditional cost analysis with differential out- come analysis to secure a larger picture of the "true cost benefit ratio" for specific nursing models.

Characteristics of Cost Analysis

    The most notable characteristic of cost analysis studies is the variety of definitions, variables, and measurement tools used in the studies. Eckhart (1993) performed a comprehensive review of 73 studies published from the early 1980s through 1990, focusing on costing-out nursing. 

    Because of the impact of DRGs, length of stay (LOS) was a consistent variable. Length of stay was found to correlate highly to nursing work performed, whether measured by acuity indexes, nursing care hours, nursing costs, patient charges, or percent of nursing costs to hospital costs. 

    These studies focused on in-patient settings, so little is known about cost analysis of nursing in nonacute settings that are the emerging focus of health care. Not all DRG categories have been studied, and there has been little validity or reliability reported on the instruments used to measure related variables. 

    Definitions critical to this area of study must be standardized. For example, which nursing staff or other care providers are included in direct care calculations? What support ser- vices are included in indirect care calculation? What role should overhead and depreciation costs of nursing-related resources play?

Area of Dispute In Cost Analysis

    Another major area of dispute for costing studies is the lack of a standard acuity measure because of the proprietary nature of most acuity systems. One study (Phillips, Castorr, Prescott, & Soeken, 1992) compared GRASP and Medicus acuity systems to the Patient Intensity for Nursing Index (PINI). PINI significantly correlated with both systems (p < .0001), but the shared variability was only 44% and 49% respectively. 

    Shared variability between GRASP and Medicos was only 34%, and it was concluded that the two acuity systems do not measure nursing resource use in the same way. Neither system was predictive of PINI items "knowledge deficit, emotional status, severity of illness, or potential for injury." Such PINI items as "hours of care, task/procedure complexity, and mobility" were significant predictors of both medicos and GRASP scores (Phillips et al., 1992). 

    These findings seem to indicate that task aspects of professional practice are measured by these systems but that interpersonal and observational aspects may not be fully appreciated. This work was confirmed by Cockerill, Pallas, Bolley, and Pink (1993) whose study compared case costs for patients across six acuity systems. 

    Variances in estimated hours of care across workload measurement tools were statistically significant and varied by up to 30%. It is impossible to distinguish between true differences in case costs and measurement error across institutions in these circumstances. 

    More study is needed to normalize acuity systems before cross-institutional data will be meaningful. Cost and efficiency of nursing procedures or treatments continue to be studied. Capasso and Munro (2003) compared two wound treatments (saline vs. hydrogel). 

    Although both were comparable for wound closure rate and cost of treatment supplies, one was significantly more expensive. The saline treatment required a higher number of home nursing visits, accounting for the difference in cost. 

    Clearly, such analyses demonstrate the multi- factorial nature of costing research and the need to look beyond the obvious in doing such analyses.

    Another fertile area for cost analysis is to evaluate cost differences among professional practice models. However, most of these studies use proprietary practice models that are difficult to duplicate in other settings. Variables are identified in these studies that do impact nursing costs, such as nursing turn- over, ratio of productive to nonproductive hours, and nursing satisfaction. 

    Russo and Land caster (1995) evaluated unlicensed assistive personnel models relative to cost-effectiveness, quality patient outcomes, and customer satisfaction. More complex issues emerge for this type of analysis. 

    Relative productivity across discipline levels, recruitment, training, and impact on quality must be added to the equation.

Growth of Capitation In Cost Analysis

    Given the growth of capitation, cost analysis of nursing services will need to take new directions. As critical pathways (benchmark performance tools) evolve as care guides, the costs of pathway changes on nursing delivery, patient outcomes, and case costs must be calculated. 

    What are the most efficient and effective pathways toward resolution of a given health problem? What practice setting is appropriate for patients at each step of the pathway? For example, when is it safe to transfer a fresh open heart patient from critical care to a stepdown environment? (Earliest transfer to a least costly delivery mode saves money.) 

    These calculations may be critical for institutions to secure managed-care contracts in a cost-competitive environment. Determining what activities can be safely eliminated from a pathway without negatively impacting care outcomes will have cost and resource savings as we move to "best demonstrated practices." Finally, we must move toward a cost-bene- fit analysis model that incorporates the out- comes of practice. 

    This aspect has been especially elusive, given the "generic" and group nature of nursing practice. With multiple nursing providers impacting a patient's care, how do we separate the relative contributions of each person or each subspecialty of nursing practice that a patient may experience in the course of their care from contributions of other disciplines? 

    Additionally, we need to quantify the costs of increased patient mortal-and failure to rescue associated with changes in nurse/patient ratios based on re- cent landmark studies (Aiken et al., 2002; Cho et al., 2003).

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