Signature
c_D = C_bed / T
| Inputs | Definition | Unit |
|---|---|---|
C_bed | Annual cost of one staffed bed in costs that do not vary with the number of patients treated | currency per bed per year |
T | Annual bed turnover rate of the same beds | patients per bed per year, above zero |
c_D | Bed cost carried by each discharge | currency per discharge, in a stated price year |
|---|
Function
Bed turnover rate and turnover interval function
Maps the discharges, available beds and occupied bed-days of a period to the two measures reported as bed turnover: the turnover rate, the number of patients each bed served, and the turnover interval, the average time a bed stands empty between one patient and the next. It also expresses both through bed occupancy and average length of stay, and spreads the annual cost of a staffed bed over the patients it served. The records follow the notation of the Bed Turnover article. The throughput identity linking annual discharges to beds, occupancy and average length of stay is held on the Average Length of Stay page (HE-FM-ALOS-002) and is referenced here, not repeated.
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Implementations
Excel
Fixed bed cost per discharge in one cell
Excel divides the named annual cost per staffed bed cell by the named annual turnover rate cell.
=AnnualBedCost/TurnoverRate
Assumptions
Bed cost shared equally across discharges
The top-down average gives every discharge an equal share of the bed's annual cost, whatever its length of stay. Long-stay patients use more bed-days, so the figure is an average for the bed stock, not the cost of a particular patient.
Bed cost unchanged as turnover changes
C_bed does not change with turnover. Cash is saved only on variable costs or when beds close; the article's route B assumes the full £120,000 is avoidable when a bed closes, treating it as semi-fixed.
Worked examples
Fixed bed cost per discharge at the baseline turnover
At £120,000 per staffed bed a year and a turnover rate of 62.05, each discharge carries about £1,933.92 of bed cost.
C_bed = 120000; T = 62.05; c_D = 1933.92
Fixed bed cost per discharge after route A
In route A the turnover rate rises to 73 and the bed cost per discharge falls to about £1,643.84, but all 400 beds stay open, so the hospital still spends £48 million a year on them.
C_bed = 120000; T = 73; c_D = 1643.84
Common errors
Reporting a lower bed cost per discharge as a cash saving
In route A the bed cost per discharge falls by about £290, which across the original 24,820 discharges looks like £7.2 million saved. No cash is saved: the £48 million bed cost is unchanged and the gain is the health benefit of 4,380 extra patients, net of the variable cost of treating them. Only route B, closing 60 beds, avoids £7.2 million a year.
Valuing bed-days freed by higher turnover at accounting cost
Page, Barnett and Graves argue that the economic cost of a bed day, not its accounting cost, is the better value for resource decisions. Bed-days freed by higher turnover are valued at their opportunity cost, the benefit to the extra patients admitted, unless beds close.
Sources
Top-down costing by dividing cost centre totals by patients treated
Mogyorosy Z, Smith P. The main methodological issues in costing health care services: a literature review. CHE Research Paper 7. York: Centre for Health Economics, University of York; 2005. Section on the top-down approach: total cost centre costs divided by the number of units such as patients treated, assuming an equal distribution of resources between patients.
Economic rather than accounting cost of a freed 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 argued to be the better value for resource decisions than the accounting cost.
Canonical Identity
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