Editorial

Assessment of Costs in Congenital Heart Surgery

World Journal for Pediatric and Congenital Heart Surgery 2014, Vol. 5(3) 363-364 ª The Author(s) 2014 Reprints and permission: sagepub.com/journalsPermissions.nav DOI: 10.1177/2150135114537651 pch.sagepub.com

Sara K. Pasquali, MD, MHS1, and Marshall L. Jacobs, MD2

With the increasing emphasis on reducing health care costs, the number of studies in the medical literature reporting data on cost continues to rise. In the field of congenital heart surgery, previous reports have demonstrated that children with congenital heart defects account for the highest resource utilization among all patients with birth defects and are in the top tier of resource use across all pediatric diseases.1,2 Cost benchmarks in the United States for a variety of common operations have been reported, and significant cost variation across hospitals has been documented, related in part to differences in complication rates and postoperative length of stay.3 In this issue of the World Journal for Pediatric and Congenital Heart Surgery, Jantzen and colleagues report on how differences in coding and classification of operations in administrative versus clinical registry data sets can impact assessment of hospital costs in the congenital heart surgery population.4 Across studies reporting cost data, the term ‘‘cost’’ has been used interchangeably at times by investigators to refer to costs, payments, and charges. However, these are three distinct concepts, and understanding what each of these terms refers to will aid clinicians in interpreting and understanding the findings of studies reporting cost data. The cost of a medical procedure refers to the sum of resources needed to carry it out. A charge is the fee assigned by the provider or hospital for the service. The payment is the reimbursement to the provider/hospital for the procedure by the payer. Charges usually exceed costs as well as payments due to negotiated rates between providers and payers. These three concepts have differing uses in health economics research. Costs are often used to determine cost-outcome relationships and costeffectiveness ratios, typically from society’s perspective. Charges are primarily useful for studies of the accounting practices of providers. Payments are of greatest interest in studies focused on the payers’ perspective. In studies reporting costs, there are several other important issues to consider. First, it can be difficult within any hospital system to estimate ‘‘true’’ costs. The most common methodology involves the use of cost to charge ratios to estimate costs. For example, the Pediatric Health Information Systems Database used in the study by Jantzen and associates collects hospital- and department-specific cost to charge ratios from all of its member hospitals allowing the estimation of cost data.4 These estimates most often include both direct and indirect (or

overhead) costs. With these methods, it is also important to account for regional differences when comparing costs across hospitals, which can be accomplished through adjusting cost data using the Centers for Medicare and Medicaid Services price-wage index in the United States, for example. However, there may still be interhospital variation in item costs, and newer methods have been developed to remove this variation and allow standardized costs per line item in order to better evaluate the volume of resources expended.2 In addition, in any cost analysis spanning multiple years, it is important to account for inflation. There are also many other important factors to consider in cost-effectiveness and cost-utility analyses, beyond the scope of this commentary. Along with understanding the methods used to assess cost, it is also important to acknowledge the limitations. Most administrative or billing data sets do not include professional fees, and thus their cost data are underestimates. Most cost studies also focus on inpatient costs, and there are limited data regarding longer term costs associated with outpatient care, reinterventions, and so on. In addition, costs must be evaluated within the context of maintaining high-quality care, and more research is needed to further define the relationship between quality and cost and mechanisms to provide care that optimizes value. Finally, costs of care for a variety of medical procedures have been shown to vary significantly across different countries, with care in the United States being the most expensive in many cases. Further study will be needed to evaluate the success of recent federal legislation and other efforts aiming in part to achieve reductions in US health care costs.

1 Department of Pediatrics and Communicable Diseases, University of Michigan Medical School, C.S. Mott Children’s Hospital, Ann Arbor, MI, USA 2 Department of Surgery, Johns Hopkins University, School of Medicine, Baltimore, MD, USA

Corresponding Author: Sara K. Pasquali, Department of Pediatrics and Communicable Diseases, University of Michigan Medical School, C.S. Mott Children’s Hospital, Ann Arbor, MI, USA. Email: [email protected]

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World Journal for Pediatric and Congenital Heart Surgery 5(3)

References 1. Robbins JM, Bird TM, Tilford JM, et al. Hospital stays, hospital charges, and in-hospital deaths among infants with selected birth defects—United States, 2003. MMWR Morb Mortal Wkly Rep. 2007;56(2): 25-29. 2. Keren R, Luan X, Localio R, et al. Prioritization of comparative effectiveness research topics in hospital pediatrics. Arch Pediatr Adolesc Med. 2012;166(12): 1155-1164.

3. Pasquali SK, Jacobs ML, He X, et al. Variation in congenital heart surgery costs across hospitals. Pediatrics. 2014;133(3): e553-e560. 4. Jantzen DW, He X, Jacobs JP, et al. The impact of differential case ascertainment in clinical registry versus administrative data on assessment of resource utilization in pediatric heart surgery. World J Pediatr Congenital Heart Surg. 2014;5(3): 398-405.

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Assessment of Costs in Congenital Heart Surgery.

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