MEASURING PUBLIC HOSPITAL COSTS - EMPIRICAL-EVIDENCE FROM THE DOMINICAN-REPUBLIC

Effective analysis of hospital performance requires the existence of a ccurate cost and output data. However, these are missing ingredients i n most developing countries due to lack of information systems or othe r sources of data. Typically, expenditures are substituted for actual costs in analyzing hospital finance. This paper presents a methodology and analysis of the actual costs of inpatient, emergency, and outpati ent services in a Dominican hospital. Through applying a set of survey instruments to a large sample of patients, the study measures and cos ts all hospital staff time, in-kind goods (drugs, medical supplies, re agents, etc.), overhead, and the depreciated value of plant and equipm ent related to the treatment of each patient. The results are striking . The budget is over 50% higher than the actual costs of services, ref lecting the high cost of waste, down time, and low productivity. For e xample, high fixed costs translate into immunizations that on the aver age cost over 20% more than outpatient surgical interventions. The mos t disturbing finding is that although physicians represent the bulk of personnel spending, the surveys could account for only 12% of the con tracted time of staff physicians, including time dedicated to treatmen t, supervision, administration, and teaching. As a proportion of the h ospital total budget, personnel spending represents a high 84%. Yet st aff costs for patient treatment never exceed 12%. These results sugges t gross inefficiency, chaotic medical care organization, and poor hosp ital management. Copyright (C) 1996 Elsevier Science Ltd