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A comparison of hospital costs with reimbursement received for patients undergoing the Norwood procedure for hypoplasia of the left heart

Published online by Cambridge University Press:  16 September 2005

Vinod Mishra ,
Harald Lindberg ,
Egil Seem ,
Ingrid Klokkerud ,
Britt Fredriksen ,
Øyvind Skraastad ,
Anna Østlie ,
Sølvi Andresen  and
Stein Vaaler
Vinod Mishra
Affiliation:
Hospital Management/Health Professional Support Department, Rikshospitalet University Hospital, Oslo, Norway
Harald Lindberg
Affiliation:
Department of Congenital Cardiac Surgery, Rikshospitalet University Hospital, Oslo, Norway
Egil Seem
Affiliation:
Department of Congenital Cardiac Surgery, Rikshospitalet University Hospital, Oslo, Norway
Ingrid Klokkerud
Affiliation:
Department of Congenital Cardiac Surgery, Rikshospitalet University Hospital, Oslo, Norway
Britt Fredriksen
Affiliation:
Pediatric Cardiothoracic Intensive Care Unit, Rikshospitalet University Hospital, Oslo, Norway
Øyvind Skraastad
Affiliation:
Department of Anaesthetics, Rikshospitalet University Hospital, Oslo, Norway
Anna Østlie
Affiliation:
Department of Anaesthetics, Rikshospitalet University Hospital, Oslo, Norway
Sølvi Andresen
Affiliation:
Hospital Management/Health Professional Support Department, Rikshospitalet University Hospital, Oslo, Norway
Stein Vaaler
Affiliation:
Hospital Management, Rikshospitalet University Hospital, Oslo, Norway
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Abstract

Objectives: To determine whether the present system of reimbursement, based on diagnosis-related groups and regular financial budgeting, covers the costs incurred during hospitalisation of 7 children undergoing the three stages of the Norwood sequence for surgical treatment of hypoplastic left heart syndrome. Methods: Between January and September 2003, 7 patients underwent initial surgical palliation with the Norwood procedure at the Rikshospitalet University Hospital. A prospective methodology was developed by our group to measure the costs associated with each individual patient. The patients were closely observed, and the relevant data was collected during their stay in hospital. The stay was divided into four different periods of requirements of resources, defined as heavy intensive care, light intensive care, intermediate care, and ordinary care. At each stage, we recorded the number of staff involved and the duration of surgery and other major procedures, as well as the cost of pharmaceuticals and other consumables. Based on these data, we calculated the cost for each patient. These costs were compared with the corresponding revenue received by the hospital for each of the patients. Results: We found the total mean cost for the three stages of the Norwood sequence was 138,934 American dollars, while the corresponding revenue received by the hospital was 43,735 American dollars. During this period, one patient died during the first stage of the Norwood sequence. Conclusions: Our study shows that steps involved in the Norwood sequence are low-volume but high-cost procedures. The reimbursement received by our hospital for the procedures was less than one-third of the recorded costs.

Keywords

Hypoplastic left heart syndromein-hospital costdiagnosis-related groups
Type
Original Article
Information
Cardiology in the Young , Volume 15 , Issue 5 , October 2005 , pp. 493 - 497
Copyright
© 2005 Cambridge University Press

The hypoplastic left heart syndrome is a fairly rare problem, occurring in about 1 in 5,000 babies. It accounts for 1 percent of all congenital heart disorders, being a potentially lethal defect, since without surgical intervention nine-tenths of patients die in the first month of life.1, 2 The dominant physiological feature of hypoplastic left heart syndrome, ductal dependency of the systemic circulation and parallel pulmonary and systemic circulations, is shared by several other less common congenital heart malformations.3 The Norwood sequence of operations, which converts the morphologically right ventricle into the systematic ventricle, was developed for palliation of the syndrome.4 The application of the now standardized surgical technique has provided initial surgical therapy for increasing numbers of neonates with this malformation.5 Experienced centres report contemporary results in the range of 75 percent to 90 percent hospital survival. As the surgical sequence is technically complicated, and very expensive, there has been almost no attempt to examine the costs incurred by the hospitals providing treatment, nor the reimbursement received by the hospitals. Our study discusses this problematic issue of cost and reimbursement.

Materials and methods

The patients and their treatment

We have been performing the Norwood sequence of procedures at Rikshospitalet University Hospital since 1999 (Table 1). For the purposes of this study, we analysed 7 consecutive patients with hypoplasia of the left heart admitted to the Hospital between January 2003 and September 2003. They included four patients undergoing the first stage of the Norwood sequence, two in the second stage, and one patient in the third stage (Table 2). We calculated the costs for each of the three stages of the Norwood sequence.

Table 1. Population of patients at the Rikshospitalet University Hospital.

Table 2. Characteristics of patients.

Operative procedure. Access was via standard median sternotomy. Arterial cannulation via the patent duct, and single atrial cannulation was performed. After establishing satisfactory extracorporeal circulation, the ventilation was discontinued, cooling was started, and the duct ligated centrally and divided. After division of the pulmonary trunk at its bifurcation, the distal part was closed with a piece of pulmonary homograft patch. A 3.5- or 4-millimetre Goretex tube, depending on the size of the patient, was then anastomosed in end-to-side fashion to the right pulmonary artery. We have summarised the precise anatomical diagnosis for each patient in Table 3. When a rectal temperature over 18 degrees centigrade was reached, the arterial pump was stopped, the brachiocephalic arteries were snared, the descending aorta cross-clamped, and cardioplegia was begun, using St. Thomas solution, 10 millilitres per kilogram, given via the arterial cannula. A classical first stage Norwood procedure, augmenting the arch with a pulmonary homograft, was then performed during circulatory arrest, and an atrial septostomy was done. Cardiopulmonary bypass was then reinstituted, rewarming started, and the proximal end of the shunt was joined to the brachiocephalic artery. After reperfusion and rewarming, the rectal temperature being over 34 degrees centigrade, the patient was weaned from bypass, using mild inotropic support with epinephrine at 0.05 micrograms per kilogram per minute, and ventilatory support with a concentration of inspired oxygen of 0.3. The sternum was routinely closed, and the patient transferred to the intensive care unit.

Table 3. Anatomic diagnosis and surgical procedures.

Postoperative management

The children were closely monitored in the cardiac intensive care unit for 5 to 7 days. The essential goal of therapy was to balance the pulmonary and systemic circulations in order to provide a sufficient supply of oxygen to the tissues. Signs of systemic circulatory failure, such as lactic acidosis, low systemic blood pressure, or low urinary output, were treated by circulatory support. In such cases, mild inotropic support was continued, combined with vasodilation using nitroprusside. In most cases, the children were extubated during the first 48 postoperative hours. In more complicated cases, the need for ventilatory support was extended, and this was combined with additional medication to provide inotropic support. Enteral feeding was started as soon as possible, and arterial and venous lines were removed when circulatory stability was achieved.

The financing of health care services in Norway is changing. Instead of global budgeting, more of the hospitals' financing is based on activity in relation to the number of specific treatments and procedures undertaken. The concept of diagnosis-related groups plays an increasingly important role in hospital financing, as the central authorities in Norway have decided that a proportion of the total revenue received by the hospital should be derived from activity according to such diagnosis-related groups.

We raised the question as to whether the present reimbursement based on diagnosis-related groups and regular financial budgeting covers the true costs incurred by the hospital in managing patients undergoing the Norwood sequence of procedures. A prospective methodology was developed to measure the costs related to the care of individual patients. The patients were closely observed and the related data collected during their stay in hospital.

Analysis of costs

The basic principle of analysis of costs is that of collating the resources used by an individual patient, and integrating them into the total in-hospital cost of care.6 We collected cost data prospectively, and calculated the total costs for each patient. A prototype database was developed which enabled us to collect data for the analysis.

We used a bottom-up microcosting method, which initially focuses on activity at the level of the patient. Cost per patient is accumulated from prospective records of the utilization of the drivers of cost, such as personnel resources, medication, and blood products. The calculation is based initially on all related or direct activities, and includes the costs of whole time equivalent staff, theatre utilization, and the cost of pharmaceuticals. The subsequent allocation of indirect costs is achieved by predefining key variables, such as the length of stay and the number of discharged patients. Microcosting is the process of determining cost through time and motion studies. The utilization of each resource used in the production of special services is recorded. This method takes account of all resources, such as costs of staff and overheads. A cost is allocated to each service by multiplying the resources used by the unit cost to obtain a measure of the total cost. This approach preserves information about the variability inherent in the medical treatment of individuals, while making it possible to estimate average resources used at the levels of the clinical department and the hospital.7

Direct registration of the drivers of cost. Personnel resources: The most important cost in health care resources is that of the time of the professional staff. This cost usually forms the largest segment of the running costs of a hospital, and includes clinicians, nurses, and other health care professionals. We have determined staff costs with reference to salary rates and other labour costs, and have correlated the number of beds with the number of whole time equivalent nurses in post. This information was used in developing four different categories of resource intensivity, and the unit resources were assigned to one of these four categories. On the basis of information gained from daily observation, direct information from the responsible nurse, and registration forms, we determined which levels of nursing care the patient received during each working shift. The number of directly dedicated nurses involved in the care of the patient during each working shift was the major determinant of costs. The four categories of nursing intensity, and of cost, were

  • high intensive care, where there was one whole time equivalent staff nurse per patient at each shift, so the nurse-to-patient ratio was one to one;
  • light intensive care, where there was a nurse-to-patient ratio of 0.5 to one or more;
  • intermediate care, where the ratio was greater than or equal to 0.25 to one; and
  • ordinary care, where the ratio was less than 0.25 to one nurse per patient.

The cost method involved two data sets: one which included patient-related or direct costs, and another which included non-patient-related or indirect costs. The basic principle of the study was that the costs should be recorded at the level of the individual patient. A method of prospective registration was applied to collect all data directly related to the patient during the period of hospitalization. These data were divided into the following cost items:

  • hospitalization and basic medical service, including medical and nursing staff;
  • pharmaceuticals and blood products;
  • procedures such as operating theatre.

Indirect costs were estimated from the costs of the clinical service departments, for instance radiology, laboratory services, pharmaceuticals, and the non-clinical service departments such as transport, housekeeping and kitchen services. The assignment of indirect costs was performed through a set of predefined allocation keys, such as the number of discharged patients and length of stay in the unit. Capital costs were not included in the calculations. To obtain the cost per discharged patient, the operating costs of the clinical department were divided by the number of discharged patients corrected for patient mix for that unit in a given year. Costs related to treatment in other hospitals, and at outpatient clinics, were not included in the analysis.

Results

The mean age at the first stage surgery was 15 days, with a range from 5 to 44 days, and the mean weight was 3,520 grams, with a range from 3,000 grams to 3,800 grams. Of the patients, 6 were boys, and one was a girl.

The mean cost of the first stage was 40,330 American dollars, while the corresponding reimbursement for the diagnosis-related group was 10,955 American dollars. The mean cost for the second stage was 51,169 American dollars, and for the third stage was 47,425 American dollars, while the corresponding reimbursements were 9,544 American dollars and 12,281 American dollars, respectively. The breakdown of costs by department is depicted in Table 4. Staff costs accounted for almost 59 percent of total costs, while blood products, drugs and supplies contributed 9 percent to the total cost.

Table 4. Length of stay and elements of care that constitute the cost items of the first, second, and third phases of the Norwood sequence.

Discussion

The Norwood sequence of procedures for hypoplasia of the left heart syndrome provide satisfactory initial palliation for infants with the lesion now recognised as the most common malformation producing a functionally univentricular arrangement. Since its introduction in 1983,8 such staged palliation can be considered one of the great achievements of cardiac surgery for congenital malformations. Several centres have reported success in small groups of patients. In Norway, neonatal cardiac transplantation is practically impossible due to the strict criterions established for infant donors.

In our hands, a diagnosis of hypoplastic left heart syndrome continues to be a risk factor for morbidity, especially for prolonged pleural effusions and prolonged hospitalization. Operative mortality at the Rikshospitalet University Hospital was near the upper end of the range reported in earlier studies, which ranges from 23 percent to 46 percent in large series reported from single institutions.9, 10 The study reported by Jacobs et al.11 showed that the highest rates of survival were achieved at institutions strongly committed to their specific protocol for surgical management.

A study by Williams et al.12 reported the median inpatient cost for the first stage of the Norwood sequence was 51,000 American dollars, for the second stage 33,892 American dollars, and for the third stage 52,183 American dollars. Gutgesell et al.13 showed that, in their experience, the time between birth and the first stage of the Norwood sequence averaged 4 days, with a range from 0 to 101 days, while the length of stay in hospital for the first stage of the sequence averaged 17 days, with a range from 1 to 173 days. Charges averaged 57,400 American dollars, with a range from zero to 759,000 dollars. This study, however, did not address the resources used, and dealt only with charges, which may differ considerably from true costs. The study of Williams et al.,12 in contrast, used the direct costs of all medical services. The cost-information system was based on line time bills for hospital services and supplies.

There are always problems or limitations associated with any economic analysis, just as with any clinical study. In our case, we collected only data concerning the cost of hospitalization at the Rikshospitalet University Hospital. Some of our conclusions, therefore, are specific to our hospital practice. For instance, the practice at Rikshospitalet University Hospital of admission and discharge of patients during different stages of the procedures may not be comparable to other countries in Western Europe or the United States of America. In Norway, hospital stays may be longer due to the long distances which patients may need to travel to their home, and the difficulties of travelling during inclement weather. Longer length of stay affects the total hospital cost. Several studies have used standard regression techniques to investigate the influence of various patient demographic variables, clinical factors, and treatment on the length of stay and costs of hospitalisation.14–16 This limits the applicability of some of these findings to other centres. Secondly, costs were calculated only for the phase of hospitalization, and the costs related to outpatient clinic visits at the Rikshospitalet and at other hospitals were not included in our analysis, possibly leading to an underestimation of the total cost of the programme of treatment. Thirdly, we did not calculate any costs related to academic and research functions of the staff of the hospital.

In conclusion, even though costs related to advanced medical treatment, as described here, are likely to change in the future, important information has been gained from our study. The approach of prospective cost analysis provides a valuable starting point for understanding the cost, and improving the financial efficiency of providing modern care for infants born with hypoplasia of the left heart.

Acknowledgements

We acknowledge the work of the nursing staff in the cardiothoracic operating room, intensive care unit and neonatal unit for their assistance in caring for the patients and in prospectively collecting the data. Special thanks are due to Dr Arild Rønnestad, and to Ildrid Myrseth, the head nurse in the thoracic intensive care unit at the Rikshospitalet University Hospital, for their assistance in providing data relating to costs.

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Table 4.