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in fact&#44; none at all for most hospital departments&#44; except for the very few that have been designated Responsibility Centers&#44; whose annual budgets and contract agreements should have legal repercussions&#46; They should&#44; but they do not&#44; because in almost all hospital administrations &#40;Responsibility Centers and all other departments&#41; preparing the budget is a meaningless task&#46; As far as I am aware&#44; most hospitals&#44; including my own&#44; draw up a budget for each department but this is no more than a bureaucratic exercise&#46; It is completely futile&#46; I shall return to this point later&#46;</p><p id="par0015" class="elsevierStylePara elsevierViewall">I believe that most of our colleagues&#44; probably including some heads of department&#44; are unfamiliar with the mechanisms of budget calculation&#44; and so I will examine some of the details&#46; In the case under analysis&#44; that of the cardiac surgery department of Hospital de Santa Marta&#44; the authors &#40;with the assistance of a reputable health economist&#41; set out to cost every expense of each type of surgical intervention&#44; using various accounting tools&#44; some direct &#40;micro-costing&#41; when feasible and some indirect &#40;mean length of stay&#41;&#46; They concluded that the sum of these expenses &#40;the final cost&#41; was far more than what was &#8216;paid&#8217; to them &#40;although the idea of payment is obviously a euphemism in this situation&#44; given the virtual nature of the contract agreement mentioned above&#41; &#8211; more than double for most patients on the authors&#8217; accounting&#46;</p><p id="par0020" class="elsevierStylePara elsevierViewall">Unfortunately&#44; the data on which Coelho et al&#46;&#8217;s study was based were collected four to five years ago&#44; and are therefore largely outdated&#46; This does not diminish the merit of the study or its relevance&#46; The fact that I may disagree with certain aspects of the methods used to calculate costs does not detract from the quality of the study&#44; which I consider to be good&#46; However&#44; given the considerable organizational and administrative differences&#44; the results of the analysis cannot be extended to other cardiac surgery departments&#46;</p><p id="par0025" class="elsevierStylePara elsevierViewall">The question of prices and payments is a contentious one&#46; Until a few years ago&#44; payments &#40;defined as revenue in accounting terms&#41; were calculated by multiplying the number of specific medical acts by the corresponding figure in the table of diagnosis-related groups &#40;DRGs&#41;&#46; This procedure was used both for the department budgets and for the annual negotiation of contract agreements between hospitals and the state&#46; DRGs&#44; introduced several decades ago&#44; initially represented the mean cost of a particular medical act&#44; calculated among selected reference institutions&#46; This of course requires constant updating&#44; since the complexity of medical acts can increase or decrease&#44; but this is not in fact done&#46; In Portugal&#44; the prices paid for DRGs used to be raised more or less every year based on the rate of inflation&#44; as if this had anything to do with medical acts&#46; One result is that three-vessel percutaneous coronary intervention in a patient who is treated in an hour in a catheterization laboratory by three or four health professionals and discharged on the same day was paid at almost the same rate as triple CABG in a four-hour operation by a team of a dozen professionals followed by 24-48 hours in the intensive care unit and hospital discharge a week later&#46;</p><p id="par0030" class="elsevierStylePara elsevierViewall">But this is no longer the case&#44; since some years ago the prices attributed to medical acts were drastically reduced&#44; by around half&#44; and the calculations are now more complicated&#44; since they are based on the case-mix index &#40;CMI&#41;&#44; a multiplication factor that is a reflection of the complexity of the medical act&#46; The overall mean CMI is 1&#44; and an institution that mainly performs more complex acts will have a CMI of more than 1&#44; while another with simpler cases on average will have a CMI of less than 1&#46; These indices&#44; multiplied by the values in the DRG tables&#44; are used to increase or decrease the prices of individual medical acts&#46;</p><p id="par0035" class="elsevierStylePara elsevierViewall">Clearly&#44; the CMI should differ between the departments in a single institution in the same way as it varies between institutions&#44; with departments performing more or less complex acts having higher or lower CMIs&#44; respectively&#46; Thus&#44; in the case of Hospital de Santa Marta&#44; the administration apparently used &#40;we do not know if this is still the case&#41; the hospital&#39;s CMI &#40;2&#46;06 in 2011 and 2&#46;21 in 2012&#41; to draw up the cardiac surgery department&#39;s budget&#44; as if the services provided in this department&#44; such as CABG&#44; were of the same complexity as all other medical acts provided by the hospital&#44; such as appendectomy or treatment of uncomplicated pneumonia&#46; The authors calculate that the CMI for their activity should be around three times as high &#40;6&#46;48 in 2011 and 6&#46;26 in 2012&#41;&#44; and if that were the case&#44; the payments received would comfortably cover costs&#46;</p><p id="par0040" class="elsevierStylePara elsevierViewall">I know what they are talking about&#44; since I have been through this experience with the administration of my own hospital&#44; but fortunately I managed to ensure that some degree of common sense prevailed&#46;</p><p id="par0045" class="elsevierStylePara elsevierViewall">Calculating the CMI is a complicated task and is highly dependent on the coding of medical acts for each institution&#46; This task&#44; which is based on data supplied by each department on their discharge sheets and is often carried out by junior doctors&#44; is of considerable importance and should be closely monitored by each department head&#46; However&#44; the process can be flawed&#58; an initially &#8216;simple&#8217; patient can become complicated&#44; either naturally or through carelessness or error&#44; and thus increase the weighting of the CMI&#44; which has a very delicate relationship with quality&#46;</p><p id="par0050" class="elsevierStylePara elsevierViewall">That said&#44; I return to my initial question&#58; what is the use of such studies&#63; The pure in heart will immediately say for the good of the institution&#46; I do not reject that assumption&#44; but the real world is not run by such sentiments&#46; One of the intended effects of the establishment of Responsibility Centers is that part of their gains will be channeled toward their staff as performance incentives&#44; as was the practice for some time in the few such centers that existed &#40;as well as in some family health units&#41; until around five years ago&#44; when this was discontinued due to state budget constraints and never re-established&#44; despite promises to the contrary&#46; In our experience&#44; this way of incentivizing productivity was clearly highly effective and should be widened rather than restricted&#46;</p><p id="par0055" class="elsevierStylePara elsevierViewall">Finally&#44; the article by Coelho et al&#46; also has the virtue of highlighting the importance of the role of the department head in regulating its activity in order to monitor both quality and cost factors&#44; an extremely difficult balancing act which requires administrative skills that are generally not taught in our medical schools and that&#44; unfortunately&#44; not all department heads have&#46;</p><p id="par0060" class="elsevierStylePara elsevierViewall">In the saying popularized by Abel Salazar&#44; &#8220;the doctor who only knows medicine does not even know medicine&#46;&#8221;</p><span id="sec0005" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="sect0005">Conflicts of interest</span><p id="par0065" class="elsevierStylePara elsevierViewall">The author has no conflicts of interest to declare&#46;</p></span></span>"
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Editorial comment
Price and cost: An unfriendly relationship in the institutions of the National Health Service
Preço e custo, uma relação pouco amigável nas instituições do SNS
Manuel J. Antunes
Centro de Cirurgia Cardiotorácica, Centro Hospitalar e Universitário de Coimbra e Faculdade de Medicina de Coimbra, Coimbra, Portugal
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    "titulo" => "Price and cost&#58; An unfriendly relationship in the institutions of the National Health Service"
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        "autoresLista" => "Manuel J&#46; Antunes"
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    "textoCompleto" => "<span class="elsevierStyleSections"><p id="par0005" class="elsevierStylePara elsevierViewall">In the article published in this issue of the <span class="elsevierStyleItalic">Journal</span> entitled &#8220;Do prices reflect the costs of cardiac surgery in the elderly&#63;&#8221;&#44;<a class="elsevierStyleCrossRef" href="#bib0005"><span class="elsevierStyleSup">1</span></a> the cardiac surgery group at Hospital de Santa Marta analyze the costs of coronary artery bypass graft surgery &#40;CABG&#41;&#44; valve surgery&#44; and combined CABG and valve surgery in patients aged &#8805;65 years and compare them with the payments made by the state under contract agreements &#40;the price&#41; for each of these surgical interventions&#44; possibly with the unstated aim of generalizing this comparison to other types of intervention&#46;</p><p id="par0010" class="elsevierStylePara elsevierViewall">The first question to ask is what is the use of such studies&#46; The answer is&#44; in fact&#44; none at all for most hospital departments&#44; except for the very few that have been designated Responsibility Centers&#44; whose annual budgets and contract agreements should have legal repercussions&#46; They should&#44; but they do not&#44; because in almost all hospital administrations &#40;Responsibility Centers and all other departments&#41; preparing the budget is a meaningless task&#46; As far as I am aware&#44; most hospitals&#44; including my own&#44; draw up a budget for each department but this is no more than a bureaucratic exercise&#46; It is completely futile&#46; I shall return to this point later&#46;</p><p id="par0015" class="elsevierStylePara elsevierViewall">I believe that most of our colleagues&#44; probably including some heads of department&#44; are unfamiliar with the mechanisms of budget calculation&#44; and so I will examine some of the details&#46; In the case under analysis&#44; that of the cardiac surgery department of Hospital de Santa Marta&#44; the authors &#40;with the assistance of a reputable health economist&#41; set out to cost every expense of each type of surgical intervention&#44; using various accounting tools&#44; some direct &#40;micro-costing&#41; when feasible and some indirect &#40;mean length of stay&#41;&#46; They concluded that the sum of these expenses &#40;the final cost&#41; was far more than what was &#8216;paid&#8217; to them &#40;although the idea of payment is obviously a euphemism in this situation&#44; given the virtual nature of the contract agreement mentioned above&#41; &#8211; more than double for most patients on the authors&#8217; accounting&#46;</p><p id="par0020" class="elsevierStylePara elsevierViewall">Unfortunately&#44; the data on which Coelho et al&#46;&#8217;s study was based were collected four to five years ago&#44; and are therefore largely outdated&#46; This does not diminish the merit of the study or its relevance&#46; The fact that I may disagree with certain aspects of the methods used to calculate costs does not detract from the quality of the study&#44; which I consider to be good&#46; However&#44; given the considerable organizational and administrative differences&#44; the results of the analysis cannot be extended to other cardiac surgery departments&#46;</p><p id="par0025" class="elsevierStylePara elsevierViewall">The question of prices and payments is a contentious one&#46; Until a few years ago&#44; payments &#40;defined as revenue in accounting terms&#41; were calculated by multiplying the number of specific medical acts by the corresponding figure in the table of diagnosis-related groups &#40;DRGs&#41;&#46; This procedure was used both for the department budgets and for the annual negotiation of contract agreements between hospitals and the state&#46; DRGs&#44; introduced several decades ago&#44; initially represented the mean cost of a particular medical act&#44; calculated among selected reference institutions&#46; This of course requires constant updating&#44; since the complexity of medical acts can increase or decrease&#44; but this is not in fact done&#46; In Portugal&#44; the prices paid for DRGs used to be raised more or less every year based on the rate of inflation&#44; as if this had anything to do with medical acts&#46; One result is that three-vessel percutaneous coronary intervention in a patient who is treated in an hour in a catheterization laboratory by three or four health professionals and discharged on the same day was paid at almost the same rate as triple CABG in a four-hour operation by a team of a dozen professionals followed by 24-48 hours in the intensive care unit and hospital discharge a week later&#46;</p><p id="par0030" class="elsevierStylePara elsevierViewall">But this is no longer the case&#44; since some years ago the prices attributed to medical acts were drastically reduced&#44; by around half&#44; and the calculations are now more complicated&#44; since they are based on the case-mix index &#40;CMI&#41;&#44; a multiplication factor that is a reflection of the complexity of the medical act&#46; The overall mean CMI is 1&#44; and an institution that mainly performs more complex acts will have a CMI of more than 1&#44; while another with simpler cases on average will have a CMI of less than 1&#46; These indices&#44; multiplied by the values in the DRG tables&#44; are used to increase or decrease the prices of individual medical acts&#46;</p><p id="par0035" class="elsevierStylePara elsevierViewall">Clearly&#44; the CMI should differ between the departments in a single institution in the same way as it varies between institutions&#44; with departments performing more or less complex acts having higher or lower CMIs&#44; respectively&#46; Thus&#44; in the case of Hospital de Santa Marta&#44; the administration apparently used &#40;we do not know if this is still the case&#41; the hospital&#39;s CMI &#40;2&#46;06 in 2011 and 2&#46;21 in 2012&#41; to draw up the cardiac surgery department&#39;s budget&#44; as if the services provided in this department&#44; such as CABG&#44; were of the same complexity as all other medical acts provided by the hospital&#44; such as appendectomy or treatment of uncomplicated pneumonia&#46; The authors calculate that the CMI for their activity should be around three times as high &#40;6&#46;48 in 2011 and 6&#46;26 in 2012&#41;&#44; and if that were the case&#44; the payments received would comfortably cover costs&#46;</p><p id="par0040" class="elsevierStylePara elsevierViewall">I know what they are talking about&#44; since I have been through this experience with the administration of my own hospital&#44; but fortunately I managed to ensure that some degree of common sense prevailed&#46;</p><p id="par0045" class="elsevierStylePara elsevierViewall">Calculating the CMI is a complicated task and is highly dependent on the coding of medical acts for each institution&#46; This task&#44; which is based on data supplied by each department on their discharge sheets and is often carried out by junior doctors&#44; is of considerable importance and should be closely monitored by each department head&#46; However&#44; the process can be flawed&#58; an initially &#8216;simple&#8217; patient can become complicated&#44; either naturally or through carelessness or error&#44; and thus increase the weighting of the CMI&#44; which has a very delicate relationship with quality&#46;</p><p id="par0050" class="elsevierStylePara elsevierViewall">That said&#44; I return to my initial question&#58; what is the use of such studies&#63; The pure in heart will immediately say for the good of the institution&#46; I do not reject that assumption&#44; but the real world is not run by such sentiments&#46; One of the intended effects of the establishment of Responsibility Centers is that part of their gains will be channeled toward their staff as performance incentives&#44; as was the practice for some time in the few such centers that existed &#40;as well as in some family health units&#41; until around five years ago&#44; when this was discontinued due to state budget constraints and never re-established&#44; despite promises to the contrary&#46; In our experience&#44; this way of incentivizing productivity was clearly highly effective and should be widened rather than restricted&#46;</p><p id="par0055" class="elsevierStylePara elsevierViewall">Finally&#44; the article by Coelho et al&#46; also has the virtue of highlighting the importance of the role of the department head in regulating its activity in order to monitor both quality and cost factors&#44; an extremely difficult balancing act which requires administrative skills that are generally not taught in our medical schools and that&#44; unfortunately&#44; not all department heads have&#46;</p><p id="par0060" class="elsevierStylePara elsevierViewall">In the saying popularized by Abel Salazar&#44; &#8220;the doctor who only knows medicine does not even know medicine&#46;&#8221;</p><span id="sec0005" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="sect0005">Conflicts of interest</span><p id="par0065" class="elsevierStylePara elsevierViewall">The author has no conflicts of interest to declare&#46;</p></span></span>"
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Article information
ISSN: 21742049
Original language: English
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Revista Portuguesa de Cardiologia (English edition)
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