HERC: Measuring Patient Incurred Costs
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Measuring Patient Incurred Costs

Patients incur costs for care in several forms: payments for transportation, copayments for care itself, and the value of time. Time is spent traveling to, waiting for, and obtaining care. Here we present a brief discussion of how to measure these costs.

Transportation

Transportation costs may be captured in several ways. In many cases it makes sense simply to survey patients directly about expenditures for public transportation or taxicabs. The average for a few visits may be used to estimate the cost of remaining trips. A second approach estimates costs based on the actual travel distance. Patients are surveyed to determine the number of miles traveled, and a cost is assigned at a constant rate per mile. A commonly used rate is published by the IRS. A related method involves measuring the straight-line distance between the patient’s home and the place of service, or between the centroids of the zip codes of the patient’s home and the place of service. For further discussion of this method, see Estimating Travel Costs. Finally, note that the VA reimburses patients for some care-related transportation. From a societal perspective, reimbursed travel expenses should not be counted as a patient cost. Reimbursements may also be captured through patient surveys.

Copayments

Copayments do not apply to most categories of Veterans, although a limited number of VA patients do make some payment for their care. From a societal perspective the particular payer is not a significant issue; the total payment is the same regardless of how it is divided among VA, the patient, and third-party payers. In a budget impact analysis, however, where only the provider’s costs are counted, then copayments in theory should be regarded as an offsetting income for VA. A review of VA utilization data will indicate what proportion of people receiving a particular VA service is exempt from copayments.

Time

Interventions have a time cost even when services are provided at no charge. Patients must spend time to wait for and receive an intervention and for transportation to and from the place where it is received. Time spent by patients carries an “opportunity cost” based on the notion that time is limited. Absent the intervention patients and others would use their time for other purposes. The time spent by caregivers is also valued.

Although the VA does not reimburse patients or caregivers for their time, a cost-effectiveness analysis from a societal perspective must take patients’ time costs into account. Russell (2009) makes a number of recommendations for valuing time costs based on the U.S. Public Health Care Task Force report (Luce et al. 1996). We summarize them here and refer readers to the two references for additional information.

  • Measure time spent in all health-related activities:
    • traveling to, waiting at, obtaining care at, and returning from a health care facility;
    • home care, such as from visiting nurses, home-health aides, family, or friends;
    • self-care, including procedures, reading, exercise, and any other activity related to health that would not be done in the absence of the condition.
  • Value the time of all persons at the average national hourly wage for people of the same sex and age. If patient time is an important part of the intervention, substitute the overall national hourly wage as a sensitivity analysis.

Finally, consider using prospective studies as an opportunity to advance our understanding of time valuation. For example, a study could directly measure time values through standard gamble, time-tradeoff, or contingent valuation surveys. There are also broader issues that remain unexplored, such as the relation of time spent in health care to choices of where to live and where to work, and how time costs affect patients’ choices among alternative treatments (Russell 2009).

References

Luce BR, Manning WG, Siegel JE. Estimating costs in cost-effectiveness analysis. In: Gold, M.R., Siegel J.E., Russell L.B., and Weinstein M.B., eds. Cost-effectiveness in health and medicine. New York: Oxford University Press, 1996.

Russell LB. Completing costs: patients' time. Medical Care 2009 July;47(7 Suppl 1): S89-S93.