Variance Analysis: New Insights from Health Care Applications

Kaplan, Robert S.; Gallani, Susanna

doi:10.2308/issues-2021-031

Cited by 5 publications

(4 citation statements)

References 4 publications

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“…Our BIR cost data also allowed us to execute a quantitative variance analysis, which identified the cost drivers (compensation rates, efficiencies, and personnel mix) that explain differences between BIR costs in the US and the other nations. 20 These results are shown in exhibit 4. "Rate difference" refers to wage differences between countries for similar jobs; "total quantity difference" refers to how much time (in minutes) one country takes to handle a BIR task compared with the others and thus is a good reflection of a system's overall efficiency; and "mix difference" refers to savings one country achieves by assigning a task to a lower-compensated employee.…”

Section: Study Resultsmentioning

confidence: 82%

Billing And Insurance–Related Administrative Costs: A Cross-National Analysis

et al. 2022

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Billing and insurance-related costs are a significant source of wasteful health care spending in Organization for Economic Cooperation and Development nations, but these administrative burdens vary across national systems. We executed a microlevel accounting of these costs in different national settings at six provider locations in five nations (Australia, Canada, Germany, the Netherlands, and Singapore) that supplements our prior study measuring the costs in the US. We found that billing and insurance-related costs for inpatient bills range from a low of $6 in Canada to a high of $215 in the US for an inpatient surgical bill (purchasing power parity adjusted). We created a taxonomy of billing and insurance-related activities (eligibility, coding, submission, and rework) that was applied to data from the six sites and allows crossnational comparisons. Higher costs in the US and Australia are attributed to high coding costs. Much of the savings achieved in some nations is attributable to assigning tasks to people in lower-skill job categories, although most of the savings are due to more efficient billing and insurance-related processes. Some nations also reduce these costs by offering financial counseling to patients before treatment. Our microlevel approach can identify specific cost drivers and reveal national billing features that reduce coding costs. It illustrates a valuable pathway for future research in understanding and mitigating administrative costs in health care.

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Section: Study Resultsmentioning

confidence: 82%

Billing And Insurance–Related Administrative Costs: A Cross-National Analysis

et al. 2022

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“…Cost differences between sites can arise from multiple sources: differences in the compensation of personnel, variation in efficiency and productivity, and differences in the skill mix of personnel when delivering the same service. We used the accounting approach of variance analysis to measure the impact of each of these 3 sources of cost variation 11 . By separating out the effects of input prices and quantity of minutes used at 2 different institutions with similar personnel used but different workflows and assignments, users can determine the total potential amount of cost savings if efficient practices of a benchmark model at “site B ” were replicated and instituted at “site A ” 11 .…”

Section: Methodsmentioning

confidence: 99%

“…We used the accounting approach of variance analysis to measure the impact of each of these 3 sources of cost variation 11 . By separating out the effects of input prices and quantity of minutes used at 2 different institutions with similar personnel used but different workflows and assignments, users can determine the total potential amount of cost savings if efficient practices of a benchmark model at “site B ” were replicated and instituted at “site A ” 11 . For variance calculation purposes, we defined UCLA as the benchmark (site B ) because it had the lowest overall process time and the average cost of SDM delivery.…”

Section: Methodsmentioning

confidence: 99%

Health System Perspective on Cost for Delivering a Decision Aid for Prostate Cancer Using Time-driven Activity-based Costing

Ho,

Kaplan,

Bergman

et al. 2023

Medical Care

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Background: Previsit decision aids (DAs) have promising outcomes in improving decisional quality, however, the cost to deploy a DA is not well defined, presenting a possible barrier to health system adoption. Objectives: We aimed to define the cost from a health system perspective of delivery of a DA. Research Design: Observational cohort. Patients and Methods: We interviewed or observed relevant personnel at 3 institutions with implemented DA distribution programs targeting men with prostate cancer. We then created process maps for DA delivery based on interview data. Cost determination was performed utilizing time-driven activity-based costing. Clinic visit length was measured on a subset of patients. Decisional quality measures were collected after the clinic visit. Results: Total process time (minutes) for DA delivery was 10.14 (UCLA), 68 (Olive View-UCLA), and 25 (Vanderbilt). Total average costs (USD) per patient were $38.32 (UCLA), $59.96 (Olive View-UCLA), and $42.38 (Vanderbilt), respectively. Labor costs were the largest contributors to the cost of DA delivery. Variance analyses confirmed the cost efficiency of electronic health record (EHR) integration. We noted a shortening of clinic visit length when the DA was used, with high levels of decision quality. Conclusions: Time-driven activity-based costing is an effective approach to determining true inclusive costs of service delivery while also elucidating opportunities for cost containment. The absolute cost of delivering a DA to men with prostate cancer in various settings is much lower than the system costs of the treatments they consider. EHR integration streamlines DA delivery efficiency and results in substantial cost savings.

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“…This remuneration and landscape of worker conditions is complex and can be challenging to assess within the country, let alone in comparison to other countries (5, 6). Differences in workforce costs are important in assessing cost variance between jurisdictions and countries, in health policy decisions and in understanding the impact of labour costs on economic evaluation (7).…”

Section: Introductionmentioning

confidence: 99%

Standardising Workforce Cost Estimates Across Australian Jurisdictions: Genomic Testing as a Use Case

Mordaunt

2024

Preprint

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Introduction Labour costs are a key driver of healthcare costs and a key component of economic evaluations in healthcare. We undertook the current study to collect information about workforce costs related to clinical genomic testing in Australia, identifying key components of pay scales and contracts, and incorporating these into a matrix to enable modelling of disaggregated costs. Methods We undertook a microcosting study of health workforce labour costs in Australia, from a health services perspective. We mapped the genomic testing processes, identifying the relevant workforce. Data was collected on the identified workforce from publicly available pay scales. Estimates were used to model the total cost from a public health services employer perspective, undertaking deterministic and probabilistic sensitivity analyses. Results We identified significant variability in the way in which pay scales and related conditions are both structured and the levels between jurisdictions. The total costs (2023-24 AUD $) ranged from 160,794 (113,848 - 233,350) for administrative staff to 703,206 (548,011 - 923,661) for pathology staff (full-time equivalent). Deterministic sensitivity analysis identified that the base salary accounts for the greatest source of uncertainty, from 24.8% (20.0% - 32.9%) for laboratory technicians to 53.6% (52.8% - 54.4%) for medical scientists. Conclusion Variations in remuneration levels and conditions between Australian jurisdictions account for considerable variation in the estimated cost of labour and may contribute significantly to the uncertainty of economic assessments of genomic testing and other labour-intensive health technologies. We outline an approach to standardise the collection and estimation of uncertainty for Australian health workforce costs and provide current estimates for labour costs.

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Variance Analysis: New Insights from Health Care Applications

Cited by 5 publications

References 4 publications

Billing And Insurance–Related Administrative Costs: A Cross-National Analysis

Billing And Insurance–Related Administrative Costs: A Cross-National Analysis

Health System Perspective on Cost for Delivering a Decision Aid for Prostate Cancer Using Time-driven Activity-based Costing

Standardising Workforce Cost Estimates Across Australian Jurisdictions: Genomic Testing as a Use Case

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