What is the cost of getting the price wrong?

Background The objective of this study was to compare differences in cost e stimates for paediatric HIV hospital service provision based on hospital pr ices with cost estimates obtained through a research-based service-specific costing exercise. Methods Activity data on the use of hospital services of children by stage of HIV infection were collected from case-notes for 118 HIV antibody positi ve children, managed at St Mary's Hospital NHS Trust, London, 1 January 198 6-31 December 1994. Hospital unit prices were obtained from the Hospital Tr ust Finance Department; unit cost estimates were obtained from relevant hos pital departments through a research-based service-specific costing exercis e. Financial data related to the 1993-1994 financial year, and were indexed to 1995-1996 prices. The main outcome measures were cost estimates per pat ient-year by stage of HIV infection. Three cost scenarios were calculated: first by linking activity data with hospital prices (Trust Prices); second by linking activity data with routinely available hospital prices plus unit s costs from the costing exercise where no relevant hospital prices existed (Supplemented Trust Prices); third, by linking activity data exclusively w ith unit costs from the hospital-specific costing exercise (Unit Costs). Results There were substantial differences between unit cost estimates per patient-year based on Trust Prices and Supplemented Trust Prices compared w ith those based on Unit Costs. Differences increased with more intense use of services. The deficit based on Trust Prices compared with Unit Costs ran ged from pound 432 per patient-year for HIV negative children, pound 574 fo r asymptomatic HIV-infected children, pound 1288 for indeterminate children , pound 1814 for children with symptomatic non-AIDS to pound 7418 per patie nt-year for children with AIDS. Conclusions In this hospital, reliance on generic hospital prices to derive cost estimates for paediatric HIV services produced considerable underesti mates of the cost of service provision compared with data derived through t he costing exercise. If this occurs across all or most areas of service pro vision, this can lead to substantial financial deficits, which in turn may mean that the needs of specific client populations may not be met.