title: Variability in costs across hospital wards. A study of Chinese hospitals.
abstract: BACKGROUND
  Analysts estimating the costs or cost-effectiveness of health interventions requiring hospitalization often cut corners because they lack data and the costs of undertaking full step-down costing studies are high. They sometimes use the costs taken from a single hospital, sometimes use simple rules of thumb for allocating total hospital costs between general inpatient care and the outpatient department, and sometimes use the average cost of an inpatient bed-day instead of a ward-specific cost.
  
  
  OBJECTIVE
  In this paper we explore for the first time the extent and the causes of variation in ward-specific costs across hospitals, using data from China. We then use the resulting model to show how ward-specific costs for hospitals outside the data set could be estimated using information on the determinants identified in the paper.
  
  
  METHODS
  Ward-specific costs estimated using step-down costing methods from 41 hospitals in 12 provinces of China were used. We used seemingly unrelated regressions to identify the determinants of variability in the ratio of the costs of specific wards to that of the outpatient department, and explain how this can be used to generate ward-specific unit costs.
  
  
  RESULTS
  Ward-specific unit costs varied considerably across hospitals, ranging from 1 to 24 times the unit cost in the outpatient department--average unit costs are not a good proxy for costs at specialty wards in general. The most important sources of variability were the number of staff and the level of capacity utilization.
  
  
  CONCLUSIONS
  More careful hospital costing studies are clearly needed. In the meantime, we have shown that in China it is possible to estimate ward-specific unit costs taking into account key determinants of variability in costs across wards. This might well be a better alternative than using simple rules of thumb or using estimates from a single study.
authors.affiliation: Alliance for Health Policy and Systems Research, World Health Organization, Geneva, Switzerland.
authors.forename: Taghreed
authors.initials: T
authors.lastname: Adam
authors.affiliation: Health Systems Governance and Financing, World Health Organization, Geneva, Switzerland.
authors.forename: David B
authors.initials: DB
authors.lastname: Evans
authors.affiliation: Institute of Chinese Medical Sciences, University of Macau, Macau, China.
authors.forename: Bian
authors.initials: B
authors.lastname: Ying
authors.affiliation: Institute for Health Metrics and Evaluation, University of Washington, Seattle, Washington, United States of America.
authors.forename: Christopher J L
authors.initials: CJ
authors.lastname: Murray
mesh_terms: D002681:China; D003362:Cost-Benefit Analysis; D017721:Hospital Costs / Q000706:statistics & numerical data; D006760:Hospitalization / Q000191:economics / Q000706:statistics & numerical data; D006801:Humans; D015233:Models, Statistical