Signature
Delta_C = n * (L_0 - L_1) * c
| Inputs | Definition | Unit |
|---|---|---|
n | Number of discharges a year in the group whose stay changes | discharges per year |
L_0 | ALOS of the group before the change | days |
L_1 | ALOS of the group after the change | days |
c | Value of one bed day released: average cost, marginal cost or opportunity cost, stated | currency per bed day |
Delta_C | Change in cost from the bed-days released | currency per year |
|---|
Function
Average length of stay calculation and bed-day costing function
Maps the bed-days and discharges of a period to the average length of stay (ALOS), and relates length of stay to bed capacity, payment trim points, a case-mix adjusted comparison and the cost of an admission or of a change in stay. The records follow the notation of the Average Length of Stay article, where L_bar is the average stay in days and N the number of discharges.
Try this function
Implementations
Excel
Cost change from a shorter stay in one cell
Excel multiplies the named cell for patients by the fall in ALOS and by the named cost per bed day cell.
=Patients*(ALOSBefore-ALOSAfter)*CostPerBedDay
Assumptions
Bed day value matched to what the freed capacity does
Cash is saved only on variable costs or by closing beds; otherwise the gain is the value of extra activity in the freed beds. The value of c is chosen to match and tested in sensitivity analysis.
No offsetting bed-days elsewhere
The shorter stay does not add readmissions or move care to other settings. Where it does, those bed-days and costs are subtracted before the saving is reported.
Worked examples
Stroke stay cut by one day at an average bed day cost
Illustrative figures: Hospital B cuts its stroke ALOS from 14.0 to 13.0 days for 300 patients, releasing 300 bed-days. At an average £450 per bed day the apparent saving is 300 × 450 = 135000 pounds.
n = 300; L_0 = 14; L_1 = 13; c = 450; Delta_C = 135000
Stroke stay cut by one day at a marginal bed day cost
At an illustrative marginal cost of £100 per bed day the cash saving is 300 × 100 = 30000 pounds. The other £105,000 is fixed cost.
n = 300; L_0 = 14; L_1 = 13; c = 100; Delta_C = 30000
Common errors
Reporting average bed day cost as a cash saving
In the illustrative stroke example, £135,000 at the average cost would be reported as saved although only £30,000 is variable. The remaining £105,000 is saved only if beds close, or becomes value only if the freed beds treat other patients. Page, Barnett and Graves found chief executives valued a ward bed day at about a quarter of its accounting cost.
Ignoring readmission bed-days after a shorter stay
If the shorter stroke stay raised readmissions by 2 percentage points, 300 × 0.02 = 6 extra readmissions at an illustrative 8 days each use 48 bed-days, offsetting 16% of the 300 released, and each brings the costly early days of a new admission.
Sources
Opportunity cost of a hospital bed day
Page K, Barnett AG, Graves N. What is a hospital bed day worth? A contingent valuation study of hospital Chief Executive Officers. BMC Health Services Research. 2017;17:137. Abstract: the economic cost of a bed day is the better value for resource decisions; willingness to pay of A$216 for a ward bed day was about four times lower than accounting costs.
Length of stay and emergency readmission in England
Martin S, Street A, Han L, Hutton J. Have hospital readmissions increased in the face of reductions in length of stay? Evidence from England. Health Policy. 2016;120(1):89-99. Abstract: conditional on survival, stroke patients with a shorter original stay were more likely to be readmitted, while overall reductions in stay were not generally associated with more emergency readmissions.
Canonical Identity
Stable URI · Machine-readable · Resolvable · CC BY 4.0