Centre for the Economics of Mental Health (CEMH), Health Services Research Department, Institute of Psychiatry, London, UK
The Royal College of Psychiatrists Research Unit, London
Centre for the Economics of Mental Health (CEMH), Health Services Research Department, Institute of Psychiatry, London, UK
Correspondence: Dr Jennifer Beecham; Centre for the Economics of Mental Health (CEMH), Box No. P024, The David Goldberg Centre, Institute of Psychiatry, De Crespigny Park, London SE5 8AF, UK. E-mail: J.Beecham{at}iop.kcl.ac.uk
Declaration of interest The Department of Health funded the study. There were no competing interests.
See invited commentary, pp.
226227, this
issue.
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ABSTRACT |
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Aims To estimate unit costs for child and adolescent psychiatric in-patient units and to analyse the variations in costs between units.
Method Data collection alongside a national survey with cost estimations guided byprinciples drawn from economic theory. Bivariate and multivariate analyses are employed to identify cost influences.
Results Fifty-eight units could provide sufficient data to allow calculation of the cost per in-patient day; mean=£197 (s.d.=71.6; 19992000 prices). The management sector, type of provision, number of rooms, capacity and location explained nearly half of the cost variation.
Conclusions Child and adolescent psychiatric in-patient units are an expensive resource, with personnel absorbing two-thirds of the total costs. Costs per in-patient day vary fourfold and the exploration of cost variations can inform commissioning strategies.
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INTRODUCTION |
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METHOD |
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In this study our aim was to estimate a cost for each child and adolescent psychiatric in-patient service that would include staffing costs, other revenue and overhead costs and capital costs. The cost estimate then would be appropriate for use in research that takes an economic perspective. However, by collecting data in a way that fitted the routine hospital accounting procedures (such as those laid out in The NHS Costing Manual; Department of Health, 2000) the results would be useful also to service providers and commissioners.
Financial data were obtained through two questions added to the NICAPS Unit Survey Questionnaire, with their scope, format and content based on previous research (Chisholm et al, 1997a). First, data were requested on the whole-time-equivalent number (by grade) of education, nursing, medical and other staff usually working on the in-patient unit, and their salaries and on-costs (expenditures associated with salaries, e.g. employers National Insurance and superannuation contributions). Time spent providing support in other parts of the hospital was to be excluded, and any staff costs allocated to other parts of the hospital or other organisations (such as the education authority) were to be included. Second, a standardised format was devised for hospital personnel to record the other costs associated with maintaining the child and adolescent psychiatric unit in the previous financial year. Data were requested on revenue costs (such as clinical support, utilities, cleaning and maintenance), the actual or apportioned expenditure on hospital overheads (personnel, administration, accounts, etc.) and capital charges for land, buildings and equipment.
Twenty-nine child and adolescent psychiatric units provided a full set of costs-related information. A further 11 units provided information on nursing costs and 18 provided whole-time-equivalent staffing data. To estimate costs for those units providing staffing information but no expenditure data, the mean cost (by grade) provided by other units was used. Forty-eight units provided information on other revenue, overhead and capital costs. Where these non-staffing costs were missing, the median cost for the 48 child and adolescent psychiatric units providing the data was employed (see also Beecham et al, 2002).
The number of in-patient bed-days each year was also calculated, adjusted for the number of days the unit was open each year and the number of places available for day patients. Data on bed availability were missing for two units. Across the 58 units for which costs could be estimated, the mean number of in-patient-equivalent places was 14.2 (range 632, s.d.=4.9; median 13.3). The mean number of in-patient-equivalent days per annum was 4863 (range 218411 680, s.d.=1754; median 4600). These data were used to calculate the cost per in-patient day.
Analysis of variations in the unit costs of child and adolescent
psychiatric in-patient units
Child and adolescent psychiatric in-patient units serve different client
groups, have different staff mixes and are located in different areas. We
should therefore expect the unit costs to vary, but to what extent do these
types of factors influence costs? A statistical cost function was estimated to
determine the potential influence of user or provider characteristics on
service costs. A cost function can be estimated for cross-sectional data where
cases have broadly similar objectives and employ broadly similar resources to
meet those objectives. (It is important to note, however, that we are not
exploring relative efficiency or trying to identify best
performing units.) Ordinary least-squares multiple regression analysis
was employed, using the cost per in-patient day as the dependent variable
(Knapp, 1998). The
hypothesised influences on costs and the final set of measures used in this
study are described below (Table
1 summarises the characteristics of the continuous variables).
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RESULTS |
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A considerable effort went into chasing the cost-related data but, by December 2000, six units were still unable to provide data on staffing patterns and two units had not reported bed availability. The remaining 58 units were similar in composition to the full NICAPS (n=66) sample in terms of the managing agency, the type of psychiatric care and the age group supported (Table 2).
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The mean cost per in-patient day for these 58 units is £197. The NHS Reference Costs 2001 show a wider range (£672237), possibly suggesting less standardisation in their estimation methodology. Personnel absorb around 70% of the total costs, with nurses accounting for just over half of that amount (Table 3). Bivariate analyses were employed to begin to explore some of the considerable variations in the unit costs, with significant differences found in the following dimensions:
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Fifty-three units reported the fee charged to placing agencies per in-patient day, including 14 returning a zero figure. For the remaining 39 units the range of fees charged was £93510 around a mean of £225 (s.d.=161; median £262). The mean cost per in-patient day remained at £197 for these 39 units and the median was slightly lower at £163. The difference of £28 between the average fee charged and the estimated cost per in-patient day reached statistical significance (t-test, P<0.001).
Variations in the costs of child and adolescent psychiatric
in-patient units
Table 4 reports the
best equations resulting from the analyses, with the second
equation (Equation II) adding the measures of childrens needs to the
service-level measures included in Equation I. The conventional criteria of
performance were employed. The cost function performs well statistically (in
particular, the individual estimated coefficients attain statistical
significance) and the overall goodness-of-fit (F statistic) is high.
The equation is parsimonious, explaining as much of the observed cost
variation (as measured by R2) as possible and with as few
included variables as possible. Finally, it is important that the equation can
be interpreted because results that do not make sense are of limited value to
decision-makers. The standardised residual from the final equation was
normally distributed, ensuring that the technique was appropriate for making
inferences about the mean. Moreover, it is the within-sample influences that
are of interest in this study because, as noted above, data have been captured
on around three-quarters of the total population.
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In Equation I nearly half of the variation in costs has been explained statistically using only the service-level measures (adjusted R2=0.464). Units managed within the NHS are found to be more expensive, all other factors considered, as are those providing a specialist service. There is a strong correlation between the managing agency and specialisation variables (Table 5), yet a single variable combining these two indicators did not improve the explanatory power of the equation, either when added to this equation or when used as a replacement for the two separate variables. A higher proportion of therapy and other rooms per available bed are also associated with higher costs, but the absolute numbers of available beds and day care places are negatively associated with costs. Finally, if the unit is located in London the direction of the coefficient is as expected, with higher costs resulting. The first three variables listed in Equation I account for 35% of the variation in cost per in-patient day.
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Although none of the throughput measures reached conventional statistical significance, whether the unit was open seven days each week was close (it was positively associated with costs). Of the measures of user characteristics, whether the unit provided a service for only adolescents was again on the borders of statistical acceptability but the indicator variable for specialist services was a stronger cost predictor. However, 10 of the 14 specialist units provide a service only to adolescents.
Equation II allowed the influences of the average ward scores for the patients mental health problems to be assessed. This resulted in an increased proportion of cost variation explained (adjusted R2=0.55) without changing the direction of influence of the previously included variables or causing too much change in the size of their impact on unit costs. Each of the measures has a positive association with costs; units that support children and adolescents who have mood disorders, schizophrenia or learning disabilities have relatively higher unit costs.
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DISCUSSION |
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There are limitations to the study. First, although these costs are as accurate as possible, given the data received, some of the cost variation could be due to measurement error or different accounting conventions in use. Although we could not visit the finance departments to check the data that they provided, our standardised methodology ensured that the scope of the data was the same across all units; costs devolved to wards and those falling to wider hospital functions were included in our final estimates. In addition, staffing costs were confirmed against nationally applicable salary scales (plus allowances and on-costs). Generally, mean and median observed staff costs were found to lie at the top of the relevant range. However, both this and a cautionary reminder about the sample size (n=58) mean that the findings should be used with some care.
The second limitation stems from the fact that the cost predictors, although taken from a wide-ranging national survey, are unlikely to reflect the full complexity of the system in which child and adolescent psychiatric in-patient units must operate. It is unsurprising, therefore, that the equations provide only a partial explanation of the cost variation. For example, we have no data describing the service model or treatment philosophy operating in each unit, nor do we have full data on the relationship between each unit and the wider organisation. Of course, the direction of causality cannot be gauged from these results. It may be the case, for example, that costs exert an influence on service factors, perhaps where financial cut-backs force services to change quickly. (Longer-term pressures of increases or reductions in capacity were not associated with in-patient day costs, however.) Finally, it is important to note the boundaries of this study. Here we focus on cost variations between the units themselves and not variations between the children and adolescents using those units (Christ et al, 1989; Chadbra et al, 1999). Nor do we compare child and adolescent psychiatric in-patient units with other programmes (e.g. Grizenko & Papineau, 1992). Moreover, this is not a study of cost-effectiveness because we have no longitudinal measures of final outcome (changes in patients welfare resulting from child and adolescent psychiatric treatment).
Resource implications of child and adolescent psychiatric in-patient
units
The overall goal of this study was to provide some improved information on
the costs of child and adolescent psychiatric in-patient units to aid central
and local service planning. Too often, costs are provided for a whole hospital
or for a clinical speciality that do not take into account the factors that
make particular wards relatively more expensive. One hospitals pricing
strategy was found to underestimate the true in-patient day costs for children
with HIV-related disorders by 20%, contributing to a hospital deficit of
around £5.9 million (Beck et
al, 1999). There is little cost research into child and
adolescent psychiatric in-patient or, indeed, community-based services
(Beecham et al, 1996;
Knapp, 1997) but some recent
UK studies have focused on individual-level support costs for various
disorders (Knapp et al,
1999; Harrington et
al, 2000).
We found that the costs of child and adolescent psychiatric in-patient care are high, at around £130 000 per day in England and Wales. If the number of in-patients on the NICAPS census day (n=663) were typical of the whole year, the total annual cost would be £47.7 million. Personnel absorb a high proportion of these costs. Both nurses and clinical staff working on these units tend to be employed on the higher scale points of their grades, probably reflecting the high care needs of the patient population. However, assessing the costs of child and adolescent psychiatric in-patient units using just these direct care costs would underestimate the full costs by around one-third. Overhead costs reflect the wider support functions undertaken by the organisations managing the child and adolescent psychiatric units and are essential for the units functioning.
Implications for commissioners and providers
There are a number of implications to take from the findings. The higher
costs associated with child and adolescent psychiatric units in London should
come as no surprise and are likely to reflect the higher prices paid by
providers for staff and other inputs. Many of the large teaching hospitals are
in London and generate a sizeable body of skills and experience, as well as
opportunities for training.
Two measures of capacity have important influences on costs, with increases in the number of available in-patient beds and number of day care places having a small but negative influence on costs. Of course, it should not be inferred from this that more patients should be squeezed into existing units or that increasingly larger units should be provided to save money. This finding needs to be balanced against the provision of good-quality care. Over-crowded units with low staff/patient ratios and poor-quality care led to the closure of many of the old water tower hospitals (Davidge et al, 1993). Although only one of our limited measures of care quality appears to influence the cost of child and adolescent psychiatric in-patient units the number of rooms other than bedrooms its impact on costs is sizeable.
The two remaining variables present a rather complex story. Specialist units are £54 more expensive per in-patient day than those providing a general psychiatry service, yet 11 of the 14 specialist units in the study were run by independent-sector organisations. Conversely, 42 of the 45 NHS units provide general rather than specialist psychiatric services and yet the analysis also shows that management within the NHS is associated with higher costs. Of course, NHS units often provide teaching and training, which may influence costs. Once the measures of young peoples mental health needs are taken into account, it is factors that relate to the provision of general psychiatry services rather than, say, eating disorders that add to the proportion of cost variation explained and have a cost-raising influence.
Child and adolescent psychiatric in-patient services are high-cost, low-volume services for which specific facility-based costs are rarely estimated. The work undertaken here shows that cost estimation for units within a hospital can be achieved using economic principles and practices set out in the NHS Costing Manual. In turn, this should encourage both central and local decision-makers to request these data on a routine basis. The finding that the costs per in-patient day vary by a factor of four and that some of this variation is associated with service characteristics can help to inform commissioners and providers as they develop contracting and pricing strategies.
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Clinical Implications and Limitations |
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LIMITATIONS
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ACKNOWLEDGMENTS |
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REFERENCES |
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Received for publication October 8, 2002. Revision received February 5, 2003. Accepted for publication February 19, 2003.
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