ists in your hospital proved that it really makes a difference? The logical extension of this discussion then becomes the solution to the problem of overuse of laboratory facilities. There are two main steps: further research into outcomes of laboratory testing in terms of real and proved benefit to the patient, and a mechanism of local review and creation of an atmosphere of acceptance for such data. For example, if the study cited previously showing noncorrelation of process and outcome in hypertension be confirmed, a local committee of the hospital medical board, or perhaps even of the Royal College of Physicians and Surgeons, should publicize the results and be empowered to state that there is now no accepted investigation for the newly diagnosed hypertensive. Primum non nocere would give the patient the benefit of the doubt and save him exposure to needles, costs and Hypaque. And wardsmanship could allow the player to win who knows the most and
"best" places where this condition is not investigated. A good start would be to have an outcomes committee in each hospital, similar to the bed utilization committee. Its terms of reference would be to collect data on the outcomes of various laboratory investigations, to publicize the data and, using whatever means the bed utilization committee uses, to suppress laboratory testing that does not lead to favourable outcomes for the patients. This approach would, incidentally, be a step in decreasing the need for "defensive" medicine in that a physician would not feel the need to order tests for his own protection if a group of peers stated these investigations were unnecessary.3 Another approach is identical to that of the bed utilization committee technique. It is basically restrictive. A laboratory service utilization committee would be set up monitoring the numbers and types of tests done for various physicians (including house staff). It
would have the power to censure in various ways those who overuse tests. I have no doubt that this approach would fail. Besides the arguments of individual physicians about quality of care and how wise the reviewers are after the fact, local politics would surely render this approach ineffective. Neither would a punitive method allay the fears of the truly conscientious physician that he had not yet done everything necessary. Only a permissive approach is going to work: permission to omit, based on scientific data and pronounced by a group of esteemed peers. References 1. BERNE E: Games People Play, New York, Ballantine Books, 1973 2. NOBREGA FT, Mosu.ow GW, SMOLDT RK, et al: Quality assessment in hypertension: analysis of process and outcome methods. N Engl I Med 296: 145, 1977 3. SiN.so.s HE, BALL JR: PSRO and the dissolution of the malpractice suit in Legal Medicine 1976, WECHT CH (ed), New York, Appleton-century-Crafts 1976, reprinted in I Fain Pract 4: 244, 1977
The mythology of hospital economics IAN C.K. TOUGH, FRCS[C]
There is a mythology of hospital economics. One of its beliefs is that more efficient bed use leads to higher costs. The argument runs that the faster the turnover the shorter the stay; the shorter the stay the more concentrated the care. As a result the cost per patient-day goes up. Is this really so? Consider a 300-bed hospital with a $10 million budget and an annual census of 100 000 patient-days. The cost per patient-day is $100. If the average length of stay of these patients was 10 days (that is, there were 10 000 admissions a year) and this is reduced to 9 days what will happen to the cost per patient-day? Suppose, first of all, that there is no corresponding increase in the number of admissions. In this case the total cost of running the hospital should obviously fall - but by how much? Hospital labour costs account for 75% of the total and a proportion of the remainder is attributable to heating, lighting, maintenance and the like. None of these costs is significantly affected by a small drop in occupancy. Most of the costs of treatment and investigation would still be expended on each patient, but in 9 days instead of 10. The reduction in stay can thus only affect a marginal area of cost the food, laundry and drug and supply costs that would have applied to that one extra day. At the most this repreDr. Tough is medical director of St. Clare's Mercy Hospital, St. John's, Newfoundland.
The myths are half truths sents 10% of the daily cost or $10 of the original $100 This small amount saved on 1 patient day in every 10 reduces the total cost a little but, since this is spread over fewer patient-days, the cost per patient day will actually rise to about $110
This, of course, is the fallacy. The admission rate would not normally stay the same. In most hospitals it would tend to rise till the previous occupancy level was reached. In that case the cost per patient-day would only rise to about $101 even allowing for the fact that the additional days would be more expensive than the ones originally saved. The latter, after all, were saved by eliminating the last (and usually cheapest) day of each patient's stay. It is assumed that the additional days each add $20 to the cost as compared with the $10 saving allowed for the days they replace. The total budget has of course risen but again by just 1 % - and 1000 more patients have been treated. Looking at it in another and perhaps more realistic way, the cost of treating each patient in the original example was $1000. In the final state described not only have another 1000 patients been admitted but the average cost of each was only $910. The physician who can achieve a saving of this order by improving his bed use is certalnly contributing to the economy of health care. This disposes too of the myth of the cost per patient-day, a misleading though convenient term. It is of course no more and no less than a simple fraction of the total annual cost of the hospital. It is used as though it measured the cost of keeping a patient for an extra day or the saving achieved
CMA JOURNAL/MAY 7, 1977/VOL. 116 1065
by earlier discharge or even the cost of an empty bed. It does none of these things. The fact that it incorporates all outpatient costs is sufficient to impugn its value as a measure of inpatient costs. Indeed the cost of an inpatient day may be as little as $30 or $40 for, say, the patient recovering from a simple surgical procedure such as a herniorraphy or as much as $200 or $300 for the day of operation for the same patient. Whenever health costs are the subject of political debate or of discussion in the news media, the greatest myth of them all tends to surface: that virtually all health costs are controlled by the physician. At first sight this seems so plausible that it tends to be accepted unquestioningly by the public. Nevertheless it is in fact the patient or, rather, the patient's illness, that determines most of the costs. In the great majority of cases the physician has only marginal control of the method of treatment and only marginal influence on its costs. His control lies principally in the areas of investigation and therapy which together seldom amount to more than a quarter of the total hospital cost. Here however his control, though marginal, is still significant. Unnecessary investigations, in particular, can add appreciably to the cost of a given case.
Again it is the cost per case that is the true measure of economy. If there are some beds needlessly occupied, some investigations unnecessarily ordered and some treatments unduly extravagant, economies are possible without sacrificing the quality of patient care. Is there a price to be paid for this? Apparently the price is control: control by admission/discharge committees, utilization committees, pharmacy committees. Control, if it is external, has a dangerous tendency to induce resistance and to lead to abdication of responsibility. In the form of self control it can do nothing but good. The choice is control by coercion or control by education. Self control is not the same thing as peer control; the motivation is professional responsibility, not conformity. A belief in some professional responsibility for the cost of health care is the necessary condition. The committees and the reviews then become a useful means to that end. Perhaps our medical schools have a responsibility to foster this attitude. There is of course one sure method to reduce hospital costs and that is to close beds. Two quite different arguments are used to support this. The first is that the demand for beds seems to reflect the supply. Is this another myth? We do not in fact know whether
this is a created demand or the disclosure of a previously unmet need. Nor can we measure the community cost, as opposed to the hospital cost, of keeping the patient out of these beds. The opposite argument is that empty beds cost money. This is of course true. It is a sound reason for closing beds to a point. Unfortunately it leads to the occupancy myth: the higher the occupancy the greater the economy. Payment systems lend potent support to this. There comes a point however, at about 85% occupancy, at which inefficiency sets in. Emergency cases linger in the casualty department, elective cases arriving for admission are turned away, extra beds go up and down, internal transfers multiply. It is difficult to put a cost on these but they are real enough to hospital staff, and of course are readily documented. What then are the facts of the physician's role in the cost of hospital care? The physician can, and should, control some hospital costs, especially those of investigation and treatment. Better bed use makes economic sense. Bed closures save money but should be justified by better bed use, not the other way around. Very high levels of occupancy are not commendable. The myths of hospital economics gain currency only because they are half-truths.
The physician and the rhetorician M.A. BALTZAN, FRCP[C]
Twenty years ago our land was filled with battle cries: "Medical care is a right not a privilege"... "Elect our government and you, the people, will have free medical care.. ... "There must be no financial barrier to medical care" - and on and on it went. The then premier of one of our provinces even said, "All we want to do is pay the doctor bill." And, in the enthusiasm and moral fervour of the day, those who questioned the integrity of a simultaneous promise of "free medical care" and an offer to pay the bill had their integrity questioned. Today the successors of these politicians, heir to the political birthright of greater expertise in rhetoric than achievement or knowledge, have discovered that evident fact can no longer be denied. Medical care is not free. They are distressed by this expense but even more distressed by the discovery that this payment is now a tax responsibility and so diminishes the ability to raise additional tax revenues Dr. Baltzan practises internal medicine in Saskatoon and chairs the department of medicine at the University of Saskatchewan.
A scapegoat must be found
to promise another "tree human right" needed to guarantee victory in the next election. Never mind that there is abundant evidence that the rise in health care costs often lags behind the general inflation rate. Ignore the rise in general government expenditures that has greatly exceeded the increase in health care
expenditures. Forget that these expenses are in line with those predicted by the Hall Commission nearly 15 years ago. Above all, hope that nobody ever rereads the commission report to discover the prediction that the country could afford such a level of expenditure. After all, these are only facts and facts can no more impede a politician in full oratorical flight than a Gatling gun can an intercontinental ballistic missile. Thus, in the complete absence of evidence, it is established that health care is too expensive. The next step in political logic is perfectly evident: a scapegoat must be found. Self-blame for a predictably created situation would lead to violation of the Pledge of Hypocrisy which is prerequisite for politicians... "Never, never and under no circumstances at any time, accept the responsibility for your action when it has an unfortunate outcome." Fortunately politicians' responses are as stereotyped as those of the Pavlovian dog, and hence it is quite possible to predict their solution. When in trouble, find a nice little minority group - one
CMA JOURNAL/MAY 7, 1977/VOL. 116 1067
"best" places where this condition is not investigated. A good start would be to have an outcomes committee in each hospital, similar to the bed utilization committee. Its terms of reference would be to collect data on the outcomes of various laboratory investigations, to publicize the data and, using whatever means the bed utilization committee uses, to suppress laboratory testing that does not lead to favourable outcomes for the patients. This approach would, incidentally, be a step in decreasing the need for "defensive" medicine in that a physician would not feel the need to order tests for his own protection if a group of peers stated these investigations were unnecessary.3 Another approach is identical to that of the bed utilization committee technique. It is basically restrictive. A laboratory service utilization committee would be set up monitoring the numbers and types of tests done for various physicians (including house staff). It
would have the power to censure in various ways those who overuse tests. I have no doubt that this approach would fail. Besides the arguments of individual physicians about quality of care and how wise the reviewers are after the fact, local politics would surely render this approach ineffective. Neither would a punitive method allay the fears of the truly conscientious physician that he had not yet done everything necessary. Only a permissive approach is going to work: permission to omit, based on scientific data and pronounced by a group of esteemed peers. References 1. BERNE E: Games People Play, New York, Ballantine Books, 1973 2. NOBREGA FT, Mosu.ow GW, SMOLDT RK, et al: Quality assessment in hypertension: analysis of process and outcome methods. N Engl I Med 296: 145, 1977 3. SiN.so.s HE, BALL JR: PSRO and the dissolution of the malpractice suit in Legal Medicine 1976, WECHT CH (ed), New York, Appleton-century-Crafts 1976, reprinted in I Fain Pract 4: 244, 1977
The mythology of hospital economics IAN C.K. TOUGH, FRCS[C]
There is a mythology of hospital economics. One of its beliefs is that more efficient bed use leads to higher costs. The argument runs that the faster the turnover the shorter the stay; the shorter the stay the more concentrated the care. As a result the cost per patient-day goes up. Is this really so? Consider a 300-bed hospital with a $10 million budget and an annual census of 100 000 patient-days. The cost per patient-day is $100. If the average length of stay of these patients was 10 days (that is, there were 10 000 admissions a year) and this is reduced to 9 days what will happen to the cost per patient-day? Suppose, first of all, that there is no corresponding increase in the number of admissions. In this case the total cost of running the hospital should obviously fall - but by how much? Hospital labour costs account for 75% of the total and a proportion of the remainder is attributable to heating, lighting, maintenance and the like. None of these costs is significantly affected by a small drop in occupancy. Most of the costs of treatment and investigation would still be expended on each patient, but in 9 days instead of 10. The reduction in stay can thus only affect a marginal area of cost the food, laundry and drug and supply costs that would have applied to that one extra day. At the most this repreDr. Tough is medical director of St. Clare's Mercy Hospital, St. John's, Newfoundland.
The myths are half truths sents 10% of the daily cost or $10 of the original $100 This small amount saved on 1 patient day in every 10 reduces the total cost a little but, since this is spread over fewer patient-days, the cost per patient day will actually rise to about $110
This, of course, is the fallacy. The admission rate would not normally stay the same. In most hospitals it would tend to rise till the previous occupancy level was reached. In that case the cost per patient-day would only rise to about $101 even allowing for the fact that the additional days would be more expensive than the ones originally saved. The latter, after all, were saved by eliminating the last (and usually cheapest) day of each patient's stay. It is assumed that the additional days each add $20 to the cost as compared with the $10 saving allowed for the days they replace. The total budget has of course risen but again by just 1 % - and 1000 more patients have been treated. Looking at it in another and perhaps more realistic way, the cost of treating each patient in the original example was $1000. In the final state described not only have another 1000 patients been admitted but the average cost of each was only $910. The physician who can achieve a saving of this order by improving his bed use is certalnly contributing to the economy of health care. This disposes too of the myth of the cost per patient-day, a misleading though convenient term. It is of course no more and no less than a simple fraction of the total annual cost of the hospital. It is used as though it measured the cost of keeping a patient for an extra day or the saving achieved
CMA JOURNAL/MAY 7, 1977/VOL. 116 1065
by earlier discharge or even the cost of an empty bed. It does none of these things. The fact that it incorporates all outpatient costs is sufficient to impugn its value as a measure of inpatient costs. Indeed the cost of an inpatient day may be as little as $30 or $40 for, say, the patient recovering from a simple surgical procedure such as a herniorraphy or as much as $200 or $300 for the day of operation for the same patient. Whenever health costs are the subject of political debate or of discussion in the news media, the greatest myth of them all tends to surface: that virtually all health costs are controlled by the physician. At first sight this seems so plausible that it tends to be accepted unquestioningly by the public. Nevertheless it is in fact the patient or, rather, the patient's illness, that determines most of the costs. In the great majority of cases the physician has only marginal control of the method of treatment and only marginal influence on its costs. His control lies principally in the areas of investigation and therapy which together seldom amount to more than a quarter of the total hospital cost. Here however his control, though marginal, is still significant. Unnecessary investigations, in particular, can add appreciably to the cost of a given case.
Again it is the cost per case that is the true measure of economy. If there are some beds needlessly occupied, some investigations unnecessarily ordered and some treatments unduly extravagant, economies are possible without sacrificing the quality of patient care. Is there a price to be paid for this? Apparently the price is control: control by admission/discharge committees, utilization committees, pharmacy committees. Control, if it is external, has a dangerous tendency to induce resistance and to lead to abdication of responsibility. In the form of self control it can do nothing but good. The choice is control by coercion or control by education. Self control is not the same thing as peer control; the motivation is professional responsibility, not conformity. A belief in some professional responsibility for the cost of health care is the necessary condition. The committees and the reviews then become a useful means to that end. Perhaps our medical schools have a responsibility to foster this attitude. There is of course one sure method to reduce hospital costs and that is to close beds. Two quite different arguments are used to support this. The first is that the demand for beds seems to reflect the supply. Is this another myth? We do not in fact know whether
this is a created demand or the disclosure of a previously unmet need. Nor can we measure the community cost, as opposed to the hospital cost, of keeping the patient out of these beds. The opposite argument is that empty beds cost money. This is of course true. It is a sound reason for closing beds to a point. Unfortunately it leads to the occupancy myth: the higher the occupancy the greater the economy. Payment systems lend potent support to this. There comes a point however, at about 85% occupancy, at which inefficiency sets in. Emergency cases linger in the casualty department, elective cases arriving for admission are turned away, extra beds go up and down, internal transfers multiply. It is difficult to put a cost on these but they are real enough to hospital staff, and of course are readily documented. What then are the facts of the physician's role in the cost of hospital care? The physician can, and should, control some hospital costs, especially those of investigation and treatment. Better bed use makes economic sense. Bed closures save money but should be justified by better bed use, not the other way around. Very high levels of occupancy are not commendable. The myths of hospital economics gain currency only because they are half-truths.
The physician and the rhetorician M.A. BALTZAN, FRCP[C]
Twenty years ago our land was filled with battle cries: "Medical care is a right not a privilege"... "Elect our government and you, the people, will have free medical care.. ... "There must be no financial barrier to medical care" - and on and on it went. The then premier of one of our provinces even said, "All we want to do is pay the doctor bill." And, in the enthusiasm and moral fervour of the day, those who questioned the integrity of a simultaneous promise of "free medical care" and an offer to pay the bill had their integrity questioned. Today the successors of these politicians, heir to the political birthright of greater expertise in rhetoric than achievement or knowledge, have discovered that evident fact can no longer be denied. Medical care is not free. They are distressed by this expense but even more distressed by the discovery that this payment is now a tax responsibility and so diminishes the ability to raise additional tax revenues Dr. Baltzan practises internal medicine in Saskatoon and chairs the department of medicine at the University of Saskatchewan.
A scapegoat must be found
to promise another "tree human right" needed to guarantee victory in the next election. Never mind that there is abundant evidence that the rise in health care costs often lags behind the general inflation rate. Ignore the rise in general government expenditures that has greatly exceeded the increase in health care
expenditures. Forget that these expenses are in line with those predicted by the Hall Commission nearly 15 years ago. Above all, hope that nobody ever rereads the commission report to discover the prediction that the country could afford such a level of expenditure. After all, these are only facts and facts can no more impede a politician in full oratorical flight than a Gatling gun can an intercontinental ballistic missile. Thus, in the complete absence of evidence, it is established that health care is too expensive. The next step in political logic is perfectly evident: a scapegoat must be found. Self-blame for a predictably created situation would lead to violation of the Pledge of Hypocrisy which is prerequisite for politicians... "Never, never and under no circumstances at any time, accept the responsibility for your action when it has an unfortunate outcome." Fortunately politicians' responses are as stereotyped as those of the Pavlovian dog, and hence it is quite possible to predict their solution. When in trouble, find a nice little minority group - one
CMA JOURNAL/MAY 7, 1977/VOL. 116 1067
