Introduction

Hospital managers are increasingly required to account for all aspects of hospital expenditure (Taheri et al, 2000) and as such Healthcare Resource Groups (HRGs) are increasingly used for hospital budgeting purposes. Pharmacy mangers within the hospital setting also work within fixed budgets and therefore accurate knowledge of the pharmaceutical costs associated with patient management is imperative. The present study addresses pharmacy expenditure within a surgical directorate. The main aim of the study was to develop an HRG-based costing model that can be used to forecast pharmacy expenditure based on surgical casemix. Such a model will be of particular benefit as an expenditure projection tool at a time when hospitals are developing accelerated operation programmes in an attempt to decrease hospital waiting times.

Method

The study was carried out within the surgical directorate of the study site hospital, which is a 378-bed teaching hospital in Northern Ireland (equivalent to a district general hospital in Great Britain). There are a total of 67 surgical beds in the hospital. Data collected over the period February to April 2000 inclusive were used to build the costing model. During that period, nursing staff recorded all pharmacy sourced items for each individual operation in the theatres used for general surgery, ENT and gynaecological procedures; each operation was also classified according to its HRG. The items identified per HRG were then costed and the average pharmaceutical cost per HRG calculated and included in the costing model. The model derived costs over the study period were then compared with the actual pharmacy expenditure which was obtained from the pharmacy computer system, using theatre user codes. Finally HRG data for operations carried out in February 2002 were costed using the model for validation purposes.

Results

Using the above approach, the estimated pharmaceutical cost for surgery items for February to April 2000 was £121,235. This figure was 3.92% over the actual pharmaceutical expenditure of £116,658 as determined from computer records. The February 2002 casemix varied considerably from that of 2000, however, the model estimated pharmaceutical cost of surgery performed in February 2002 (£35,236) was again very similar to the computer logged expenditure (8.41% under the actual expenditure for that period). Assuming an inflation rate of 4% per annum, then the model estimated cost almost exactly matched the actual cost, indicating the robustness of the HRG based costing approach.

Discussion

An understanding of the potential impact that change in casemix can have within a hospital is crucial in planning and managing services and in the provision of efficient and cost-effective healthcare. HRGs provide a common 'currency' for monitoring purposes and indeed there is little doubt that identifying best practices through HRG benchmarking will take on a more significant role in the healthcare market in the future (Knoer et al, 1999). The present work has resulted in an HRG based model for the estimation of pharmaceutical costs associated with surgical procedures; the use of such modelling will be important in pharmacy expenditure forecasting, especially during planning of accelerated operation schedules. Work is ongoing to see if such a model can also be constructed for costing medical HRGs. This latter work is considerably more challenging since there is much less uniformity in pharmaceutical costs for medical HRGs.

References

1. Knoer SJ, Couldry RJ, Folker T Evaluating a benchmarking database and identifying cost reduction opportunities by diagnosis-related group American Journal of Health-System Pharmacy 56 (1999) 1102-1107

2. Taheri PA, Butz D, Griffes LC, Morlock DR, Greenfield LJ Physician impact on the total cost of care Annals of Surgery 231 (2000) 432-435