Cost Accounting by Diagnosis in a Japanese University Hospital

Transcription

1 Journal of Medical Systems, Vol. 28, No. 5, October 2004 ( C 2004) Cost Accounting by Diagnosis in a Japanese University Hospital Koji Tanaka, 1,4 Junzo Sato, 2 Jinqiu Guo, 1 Akira Takada, 2 and Hiroyuki Yoshihara 3 Cost accounting according to diagnoses covering approximately 600 inpatients with 64 diseases in 20 departments of Kumamoto University was carried out. The reports of these results were automatically generated and used for individual departmental meetings with participating delegates. The administration of each department as well as the management of diseases was discussed at the meetings, and all departments were requested to provide a report of their discussions. We are planning to increase the number of patients in the sample group and to perform more comprehensive and accurate hospital cost accounting. KEY WORDS: hospital management; hospital cost accounting; cost accounting by diagnosis. INTRODUCTION Historically, the role of research, education, and advanced medication were prioritized highly in Japanese national university hospitals. In recent years, cost effectiveness and profitability have been added to these priorities. The boards of management of the hospitals are not only required to run their establishments efficiently, but they must also convince both patients and taxpayers of the rationality of their enterprises. (1) In the case of our university, the income of its hospital absorbs more than half of the entire budget allocated to the university. (2) To improve the fund management of university, an improvement in profitability of its hospital is therefore essential. BACKGROUND In recent years, cost accounting trials in hospitals have become relatively common, and certain account calculation methods have been, and continue to be 1 Graduate School of Medicine, Kumamoto University, Kumamoto, Japan. 2 Medical Information Technology, Kumamoto University Hospital, Kumamoto, Japan. 3 Medical Information Technology, Kyoto University Hospital, Kyoto, Japan. 4 To whom correspondence should be addressed; tnkj@fc.kuh.kumamoto-u.ac.jp /04/ /0 C 2004 Springer Science+Business Media, Inc.

2 438 Tanaka, Sato, Guo, Takada, and Yoshihara implemented. (3,4) To date, the financial reports of the Japanese national university hospitals have shown only the overall accounts of the hospitals. The accounts are, in fact, categorized by item, rather than by departmental expenditure. Thus, it is difficult to break down the accounting information which would, in turn, allow more effective management decisions. During the initial stages of the management analysis, the accounts of Kumamoto University Hospital were examined by department. To calculate more detailed hospital costing, a Hospital Management Data Entry System (5) has been used in Kumamoto University Hospital since the year This software allocates the overall cost of the hospital to the various departments according to a set of previously defined criteria. This system originated from a project entitled The Data Program for Management of Hospital in Miyazaki Medical College in This project was initiated by Yoshihara, Araki, et al. as a pilot study of what was known then as the Ministry of Education. This software has evolved into a common cost accounting application for Japanese national university hospitals. The main function of the Hospital Management Data Entry System is to subdivide the total expenditure of the hospital according to the various departments. Expenditure is broken down into the following categories: Year months Hospital departments back-office sections direct departments patients inpatients and outpatients month days department patients Several subdivisions of expenditure, based on the number of beds, covering area, amount of budget, number of patients in each department, etc, are included in the system. If further expenditure subdivisions are required, users can define new criteria in the system. Data related to income and expenditure in the hospital as well as master tables are required. Income-related information mainly includes data related to medical interventions. Expenditure-related information is based on salary data and hospital costs categorized according to major expenses. The master tables are mainly used for classifying data and subdividing costs for further analysis. Output data are itemized according to income and expenditure, as well as information related to insurance and diagnosis. These data are written in standardized XML or CSV format. The data structure is compliant with Financial Analysis Information format (FAIR) (6) designed for electronic data exchange between HISs and hospital financial analysis systems. The FAIR screen has a 3-level hierarchical structure for budget and expenditure; results can be viewed according to this structure. Thus far, departmental accounting has been calculated by means of cost accounting software already present in the hospital. This system allowed an analysis of accounts to be carried out according to daily expenditure in each of the departments. However, as no accurate diagnosis for individual patients were stored in the computer systems, cost accounting according to disease was not possible. So a more detailed breakdown became desirable.

3 Cost Accounting by Diagnosis in a Japanese University Hospital 439 MATERIALS Hospital Management Data Entry System, Version Created in 2000 Hardware: Fujitsu FMV (IBM PC/AT clone, Pentium 4 1.7GHz single processor, 512MB memory, 100GB HDD) Software: Microsoft Windows 2000, Intersystems Cache Version 4 Materials for Unique Analysis Software: Wolfram Research Mathematica 4.2, (7) Adobe SVG Plug-in (8) METHODOLOGY Cost Accounting Processes Firstly, we calculated the expenditure of Kumamoto University Hospital in the year 2000 by department, using the standard facilities in the Hospital Management Data Entry System. Secondly, an analysis of diseases was carried out. To correlate each of the output data with a certain disease or diagnosis, target patients were chosen. In cooperation with the departments, the top three diseases were selected for each department. Ten inpatients with typical disease characteristics were extracted. Patients who suffered from complications or who underwent additional treatments were omitted from the calculations. Approximately 600 inpatients, 64 diseases, and 20 departments (all hospital departments except for the psychiatry and general medicine departments) were covered. Daily expenditure per patient was calculated; expenditure was then totalled and averaged according to disease. The results were tabulated and charted as expenditure by disease, expenditure by patient, and daily expenditure by disease. When extracting the data, we often had to access the Cache database with SQL queries because the standard I/O equipment of the system lacked sufficient functionality to do this. Finally, HTML reports including charts were generated, and uploaded to a particular http server in the hospital. Graphs and charts were written in SVG; Scalable Vector Graphics were also automatically generated in Mathematica. Meetings With the Departmental Delegates At departmental meetings, departmental expenditure and expenditure by disease were discussed. The head physician and head nurse on the ward of each department as well as staff engaged in managerial analysis participated in the meetings. The following, in particular, were highlighted: It was recommended that staff members would not hold particular departments accountable for inadequate funding. As it was impossible to determine the actual cost of certain items, expenditure on these items was calculated by means of certain cost allocation methods.

4 440 Tanaka, Sato, Guo, Takada, and Yoshihara Certain cost allocation criteria remain unspecified and the results of calculations are therefore provisional. Treatment for diseases, which resulted in budgetary deficits, should not merely be discontinued; rather treatment should be administered in light of the important social function of the national university hospitals and the social aspect or importance of the diseases themselves. Finally, all departments were requested to report back on their discussions and reflect on how their conclusions might impact on the clinical procedures in their departments. RESULTS Results examples, consisting of automatically-generated HTML pages are shown in Figs HTML pages including departmental income and expenditure (Fig. 1), distribution of income and expenditure by disease (Fig. 2), distribution of income by disease (Fig. 3), and daily income and expenditure by patient (Fig. 4) are shown. Figure 1 shows departmental income, expenditure, and balance. Figure 2 shows the distribution of balances (vertical axis) and the duration of hospitalization (horizontal axis). The size of circles indicates the average income per disease. In Fig. 3 the amount of money (vertical axis) and duration (horizontal axis) of patient hospitalization for Fig. 1. Result example: Departmental income and expenditure. Departmental income, expenditure, and balance are shown in bar charts. The data of inpatients and outpatients are plotted on separate charts.

5 Cost Accounting by Diagnosis in a Japanese University Hospital 441 Fig. 2. Result example: Distribution of income and expenditure by disease. The distribution of balances (vertical axis) and the duration of hospitalization (horizontal axis) are shown. The size of circles indicates the average income for single hospitalization per disease. a particular disease were plotted. In Fig. 4, daily income, cost, and balance were plotted. The horizontal axis represents time in days while the vertical axis shows the amount of money. Hospitalizations necessitating operations were matched with the day of the operation. Result example: Departmental income and expenditure (Fig. 1). Result example: Distribution of income and expenditure by disease (Fig. 2). Result example: Distribution of income by disease (Fig. 3). Result example: Daily income and expenditure by patient (Fig. 4). DISCUSSION Daily Expenditure by Disease With regard to hospitalizations requiring operative treatments, major surpluses are recorded on the day of the operation; on other days, however, the accounts almost balance. These tendencies are seen also in cases involving the other diseases

6 442 Tanaka, Sato, Guo, Takada, and Yoshihara Fig. 3. Result example: Distribution of income by disease. The amount of money (vertical axis) and duration (horizontal axis) of patient hospitalization for a particular disease were plotted. in Kumamoto University Hospital and in the previous reports from other hospitals. (9) If the days before and after operations are shortened, this would result in increased profitability of the ward. In regard to these diseases, an effort to shorten the duration of hospitalization can prove economical. On the other hand, the account balances for hospitalizations without operations, like most admissions in the internal medicine departments, showed no clear-cut characteristics. Improving the balances for these diseases is less straightforward. Meetings With Departmental Delegates Expenditure by department and expenditure by disease were the primary topics of discussion at the departmental meetings. Thus, comprehensibility and content are both important when making presentations to the various occupational and specialty groups. Above all, given that the majority of university hospitals have more than 20 discrete departments and, on average, in excess of thousand employees, interdepartmental communication is difficult between the various disciplines. Therefore, graphical imagery and nontechnical terminology formed the basis of the various presentations. Almost all of the participants from the departments were surprised at the results and showed strong interest in the presentations, particularly given that they had previously had little other than income-based information with which to work. Although participants remained calm at the meetings, sharp criticism and emotional objections

7 Cost Accounting by Diagnosis in a Japanese University Hospital 443 Fig. 4. Result example: Daily income and expenditure by patient. Daily income, cost, and balance were plotted. The horizontal axis represents time in days while the vertical axis shows the amount of money. Hospitalizations necessitating operations were matched with the day of the operation. were noted in the participants response papers turned in after the presentations. Expenditure allocations were the greatest bone of contention, and certain participants criticized the manner of cost allocation itself. However, all departments returned their response papers and none denied the significance of these trials. Although listing various points of concern in relation to certain calculations, departmental representatives generally displayed a positive attitude regarding the financial issues discussed. Emphasis on medical care for profitable diseases, reduction in the length of hospitalizations, enhanced cooperation with support hospitals, more economical use of materials, and the introduction of clinical pathways were all proposed for implementation. Immediately after the meetings, efforts to implement improved procedures were undertaken by the departments. The average hospital stay has become shorter and the capacity utilization of hospital beds has improved, according to the

8 444 Tanaka, Sato, Guo, Takada, and Yoshihara monthly reports. Further meetings were planned for Spring 2003 to discuss account from the latter half of Cost Accounting Methods We couldn t help adopt a modified Ratio-of-Cost-to Charges (RCC) costing method in some items of expenditure in spite of its inaccuracy. Expenditure allocations based on revenue were strongly criticized for their arbitrary nature in the departmental meetings. Alternate criteria for cost allocation are needed, but this RCC-like costing method will remain to be used in some items for the present. Several concepts of cost accounting such as Relative Value Unit (RVU) or Activity Based Costing (ABC) method have been newly introduced in the medical field. (3,10 12) These methods differ in relation to data-processing cost, accuracy, and the quantity of information. With advances in information technology, superior and more accurate information-retention procedures tend to be chosen, even if these necessitate considerable expenditure on data processing. (3) With regard to material cost and expense items which were difficult to assess given the present state of Kumamoto University Hospital, actual costs can only be calculated if a logistics management system is installed. Whatever the case may be, our aim in making these calculations is to acquire information which will assist in decision-making; this is more an example of management accounting than that of a financial one. Swift and reasonably accurate calculations must be achieved without necessitating overly complicated methodologies and system implementations. Problems in the Implementation on the Systems It is a significant achievement that rapid calculations (using data from the existing system which include HIS at the medical site) are now possible. But a number of problems have arisen during the implementation of the system. Because the CSV file format output from Hospital Management Data Entry System carries certain disadvantages related to the external systems, we were obliged to operate the Cache database using SQL queries. Certain system improvements will therefore be requested of the software developers. The Future A modified Diagnostic Related Groups-based Prospective Payment System (DRG/PPS) was introduced to all Japanese University Hospitals in the spring of (13) Daily hospital charges of inpatients are now, with few exceptions, calculated comprehensively according to patients diagnoses. Under this system, diseases requiring the greatest medical resources are determined according to individual patients. As the number of sample patients can be drastically increased using this diagnostic system, a more accurate analysis of hospital management will be achieved in the near future.

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