Micro-Cost Methods: Estimation of Cost Functions
A statistical cost function can be a useful way to estimate the cost of VA hospital stays. It requires a suitable source of non-VA data that includes costs (or cost-adjusted charges) and the factors most influential in explaining the variation in resources, such as the characteristics of the patient, the hospital, and the hospital stay. The cost function is estimated through regression analysis with cost as the dependent variable and the characteristics as independent variables. The resulting coefficients may be used to create fitted values of the dependent variable, representing VA costs given the observed levels of VA utilization and the function's parameters.
Cost functions are easier to estimate and require less data than a pseudo-bill. Creating a pseudo-bills can be difficult because the VA does not gather the same information that non-VA hospitals and physicians use to bill for their services. An especially important deficiency in the VA data is potentially incomplete recording of non-surgical procedures.
Cost functions are more precise than average cost estimates. In some cases it may seem inappropriate to follow the assumptions used in creating average cost estimates. For example, it may not be credible to claim that the cost of an inpatient stay is proportionate to the Diagnosis Related Group (DRG) weight. There may be additional information available to explain the differences in costs of hospital stays that have the same DRG. Examples of factors that may affect cost are the length of stay, the diagnosis assigned to a hospital stay, the procedures performed, and the patient's vital status at discharge.
HERC has prepared a bibliography of journal articles and reports that use VA data; see the downloads section below.
Two FAQ responses are available on clinical cost functions:
[ FAQ # E1: How do I estimate costs with a clinical cost function? ]
[ FAQ # E2: What is retransformation bias, and how can it be corrected? ]
To ensure the protection of VA information, we have restricted access to certain files (denoted by the"lock" icon). Contact HERC to download these restricted files.
- Micro-cost methods of determining VA health care costs
Date: 12/1/2005 | Size: 2.10Mb
See Chapter 3 of this guidebook for detailed information on FMS files commonly used by researchers.
- VA Cost Annot Bibliog 03-06
Date: 3/24/2006 | Size: 48Kb
For users without EndNoteŽ, HERC has prepared an Adobe PDF document that lists all the citations in alphabetical order by author that are included in the EndNote file.
- VA Cost Annot Bibliog 03-06
Date: 3/24/2006 | Size: 633Kb
This database may be opened using the EndNote program (see the EndNote website for a free trial version). The database is also compatible with the application Reference Manager.