|Year : 2013 | Volume
| Issue : 3 | Page : 397-401
Cost analysis of in-patient cancer chemotherapy at a tertiary care hospital
Mohammad Ashraf Wani1, SA Tabish1, Farooq A Jan1, Nazir A Khan2, ZA Wafai3, KK Pandita1
1 Department of Hospital Administration, Sher-i-Kashmir Institute of Medical Sciences, Srinagar, Kashmir, India
2 Department of Radiation Oncology, Sher-i-Kashmir Institute of Medical Sciences, Srinagar, Kashmir, India
3 Department of Clinical Pharmacology, Sher-i-Kashmir Institute of Medical Sciences, Srinagar, Kashmir, India
|Date of Web Publication||8-Oct-2013|
Mohammad Ashraf Wani
Department of Hospital Administration, Sher-i-Kashmir Institute of Medical Sciences Srinagar, Kashmir - 190 011
Source of Support: None, Conflict of Interest: None
Aim: Cancer remains a major health problem in all communities worldwide. Rising healthcare costs associated with treating advanced cancers present a significant economic challenge. It is a need of the hour that the health sector should devise cost-effective measures to be put in place for better affordability of treatments. To achieve this objective, information generation through indigenous hospital data on unit cost of in-patient cancer chemotherapy in medical oncology became imperative and thus hallmark of this study.
Design and Setting: The present prospective hospital based study was conducted in Medical Oncology Department of tertiary care teaching hospital.
Materials and Methods: After permission from the Ethical Committee, a prospective study of 6 months duration was carried out to study the cost of treatment provided to in-patients in Medical Oncology. Direct costs that include the cost of material, labor and laboratory investigations, along with indirect costs were calculated, and data analyzed to compute unit cost of treatment.
Results: The major cost components of in-patient cancer chemotherapy are cost of drugs and materials as 46.88% and labor as 48.45%. The average unit cost per patient per bed day for in-patient chemotherapy is Rs. 5725.12 ($125.96). This includes expenditure incurred both by the hospital and the patient (out of pocket).
Conclusion: The economic burden of cancer treatment is quite high both for the patient and the healthcare provider. Modalities in the form of health insurance coverage need to be established and strengthened for pooling of resources for the treatment and transfer of risks of these patients.
Keywords: Cancer chemotherapy, cost analysis, in-patient, medical oncology, unit cost
|How to cite this article:|
Wani MA, Tabish S A, Jan FA, Khan NA, Wafai Z A, Pandita K K. Cost analysis of in-patient cancer chemotherapy at a tertiary care hospital. J Can Res Ther 2013;9:397-401
|How to cite this URL:|
Wani MA, Tabish S A, Jan FA, Khan NA, Wafai Z A, Pandita K K. Cost analysis of in-patient cancer chemotherapy at a tertiary care hospital. J Can Res Ther [serial online] 2013 [cited 2020 Jan 20];9:397-401. Available from: http://www.cancerjournal.net/text.asp?2013/9/3/397/119314
| > Introduction|| |
Cancer remains a major health problem in all communities world-wide. Cancers in all forms are causing 9% of deaths throughout the world. One in every four deaths in the USA is related to cancer.  It is estimated that there are approximately 2-2.5 million cases of cancer in India at any given point of time, with around 700,000-900,000 new cases being detected every year. Nearly half of these cases die each year.  This disease consumes a major portion of annual health budget. On the optimistic side, the 5 year survival rate of cancer patients has increased world over. 
Rising health-care costs coupled with associated high expenses in treating advanced cancer, present a significant challenge to the economy in resource poor setting. Strategic interventions, on the basis of the extent of the burden, are need of the hour.  It is important therefore, to generate indigenous hospital data on direct and indirect components of unit cost of in-patient cancer chemotherapy in Medical Oncology Department of Regional Cancer Centre as an index of the size of the problem. Computation of the "patient day" i.e., cost involved per patient per bed day facilitates the cost-analysis.
The global cancer burden in the last two decades has shown a distinct shift to increasing financial impact even in resource rich countries that have comprehensive health insurance policies in place. In developing countries where health insurance may not exist, cost often becomes the limiting factor in cancer treatments resulting in unimaginable adverse patient out-comes. In resource poor countries such as India, the major challenge is to find strategies to match limited resources with proper utilization in managing cancers, which could otherwise become a major impediment to the socioeconomic development of the economically emerging nations.  Information on hospital unit costs should be a valuable tool in the hands of policy planning and research in the health sector. 
Antineoplastic drugs continue to contribute to the growing hospital pharmacy drug expenditures.  Economic analysis can be performed from a number of perspectives, including the perspective of the patient, the health-care provider, the insurance company, the state or the society at large.  In our study, the costing has been calculated mainly from the perspective of the healthcare system (the hospital).
| > Materials and Methods|| |
After permission from the Ethical Committee, the present prospective study was carried out for a period of 6 months (October 2010 to March 2011) in Medical Oncology Department of Sher-i-Kashmir Institute of Medical Science (SKIMS), Srinagar, which is a 700 bedded tertiary care teaching hospital with Regional Cancer Centre facility. In order to find direct treatment related costs that include the cost of material, labor, and laboratory investigations and indirect costs on services, a questionnaire was used for collection of data for unit cost analysis. The data were collected daily from medical records of oncology ward. The unit cost analysis was carried out using the technique of average costing with a top down approach in estimating the costs incurred by the hospital for providing the service. The expenditure borne by the patient (out of pocket) for purchase of drugs was also included in computing the Unit Cost. The costs were considered under following heads:
Information was recorded regarding quantity and cost of all the materials including drugs, disposables and other consumables provided to the patient free of cost by the hospital pharmacy store and purchased by patient (out of pocket) from the pharmacy sales counter of hospital or open market. Each patient was interviewed (after explaining to the patient or his/her attendant and also checking the vouchers and bills available with them) regarding the drugs and supplies purchased. This was supplemented by examining relevant records in ward, central store and drug and pharmacy store.
The labor cost was calculated on the basis of actual staff employed in medical oncology ward. Full time was considered for nurses and Class-IV employees and other auxiliary staff who were permanently posted there. An observed assessment for a period of 4 weeks was conducted initially to know how much time all categories of doctors spent per day for the care of in-patients in medical oncology ward. This was supplemented by interview with doctors from all cadres of faculty, residents, and those perusing post graduate studies. Their salaries were apportioned accordingly while calculating labor cost. For purposes of this study the salary included, basic pay, dearness allowances, house rent, and city compensatory allowances. Salary particulars were obtained from accounts section of the hospital while as terminal benefits like gratuity and pension etc., were not taken into account.
Cost of laboratory investigations
The cost of these investigations was taken same as is being charged for out-patients at SKIMS. Only those investigations were considered, which were being carried out while the patient was admitted in medical oncology ward. Information to this effect was obtained from patient records and recorded daily.
Indirect costs included expenditure on electricity, water, construction, cost depreciation of the building, and other miscellaneous costs such as admission charges, cost of sanitation, linen, stationary and food.
Cost of electricity
As there is no metered supply of electricity for the individual departments at SKIMS, the cost of electricity was calculated on the basis of actual electric load of the electrical gadgets as specified by the manufacturers. As such, existing electricity tariff issued by Power Development Department of the State Government in 2010-2011 at Rs. 700.0 for first Kw consumed and Rs. 900.0 thereafter including 22% electricity duty and 0.5 added as diversity factor, has been utilized for calculating the cost of electricity. The total electricity was calculated per month, which was accordingly apportioned among a number of patients. This was calculated with the help of Electrical Engineering Department of SKIMS.
Cost of water supply
The cost of water consumption was calculated on the basis of average quantity consumed per day in the medical oncology ward and its offices. Total number of water taps and water discharge per tap per hour was taken to calculate daily water consumption. The prevailing cost fixed by Public Health Engineering Department of State Govt. as per 2010-2011 rates was used to derive the cost component of water with the help of Civil Engineering Department of SKIMS.
The area occupied by medical oncology ward and offices was physically measured. The capital value on account of building and its fixed assets (plumbing and electrification) was calculated with the help of Civil Engineering Department of SKIMS. Assuming the life of building to be 100 years, the depreciation of the capital value at the annual rate of 1% was calculated. Depreciation of fixtures was calculated as 5% of the capital cost per annum. The maintenance cost of building and fixtures was calculated on the basis of actual verified from Civil Engineering Department of SKIMS. These costs were apportioned to each patient per day.
Miscellaneous costs were calculated on the basis of the actual month wise consumption of each item (sanitation, stationary, linen, food, admission charges) and their price per unit was obtained from the respective departments. The cost of these items was calculated for the whole study period and then apportioned accordingly among a number of patients for the period of study. The cost of central heating, telephone calls, security, and other office furniture costs were not taken into consideration. Finally, the data were analyzed to compute the unit cost of treatment per bed day.
| > Results|| |
A total of 275 patients were admitted for chemotherapy during the study period whose length of stay was spread over 1585 in-patient days with an average length of stay of 5.76 days. The major cost components of in-patient cancer chemotherapy are costs of drugs and materials and labor cost. They are 46.88% and 48.45% respectively. The average unit cost per patient per bed day for in-patient chemotherapy is Rs. 5725.12 ($125.96). [Table 1] and [Table 2] and [Figure 1] show detailed average month-wise and total percentage wise direct and overhead costs.
|Figure 1: Contribution of different costs components [Reference number "JCRT_680_12"]|
Click here to view
Out of Rs. 5725.12 i.e., the average unit cost per patient per bed day, taking into consideration all costs, the estimated provider cost was Rs. 3378.30 (58.79%) and out of pocket expenditure was RS. 2347.30 (41.21%).
| > Discussion|| |
The large pressure on health-care budgets forces governments to consider carefully how to spend their money with phenomenal size in hospital costs, the administration has to devote considerable time and energy to monitor and contain costs. The medical staff knows very little or nothing about the economics of hospital care. Therefore, it is necessary to make them cost conscious, to reduce expenditure without jeopardizing patient care. The hospital administrator achieves this objective through presenting them with different types of costing data and seeking their cooperation in containing costs. The study revealed that direct material cost, which included drugs and disposables was Rs. 2340.52 ($51.49) per patient per bed day. The total material cost was Rs. 3709735.81 ($81622.35), which is 46.88% of the total cost out of which 46.39% was spent on drugs and 0.49% on disposables. A study conducted in USA showed that the drugs prescribed by oncologists account for more than 40% of Medicare drug spending, which excludes drug administration charges, evaluation and management services.  Another study conducted in the Toronto-Bay View Regional Cancer Centre calculated the cost of out-patient chemotherapy. In this study cost of drug administration/dose was calculated to be $152.53 on the out-patient basis and $185.39 for in-patient administration.  These minor differences, which occur from hospital to hospital might be due to the difference in case mix and hospital standard management protocols and other causes of exclusion of some services as explained above. Medical specialties are not homogenous and costs vary greatly between different patients, specific groups, and specialties. It may also be due to the range of complications occurring in these patients in different settings.
The percentage cost of drugs borne by the patient out of their own pocket is 40.48% and the cost borne by the hospital is about 5.91%. This is in total disagreement with study of cost analysis for in-patient services conducted by Sharma at AIIMS, New Delhi in 1998, which revealed that 91% of cost on drugs was borne by the hospital and 9% by the Patient.  This indicates that although there is much expansion of health care facilities from 1998, but now much of the burden of care falls on patient himself and his family. Another study conducted at SKIMS showed that 88.88% of patients had incurred maximum expenditure on drugs followed by investigations.  While in many developed countries over 70% of pharmaceuticals are publicly funded through reimbursement plans and other mechanisms, in developing economies 50-90% of drugs are paid for by the patients themselves. Medicines are the major out-of-pocket health expenses for poor patients in most developing countries.  Analysis indicates that the costs of antineoplastic drugs have risen from $10,156 for 1973-74 to $296,914 for 1979-80, anticancer drug costs have risen from 5.74% to 16.74% of the total drug budget during the same period. Cancer drug costs will continue to represent a large portion of a total hospital budget in the future and budgets must be planned accordingly. 
The average labor cost was calculated to be Rs. 2773.95 ($61.00). The labor cost was the single highest cost component in our study i.e., 48.45% of total spending. In a study conducted in Belgium, the cost of medical and non-medical staff was shown to be 50%.  Another study of cost analysis for in-patient services conducted at a premier teaching hospital of India estimated expenditure on the manpower to be 40% of the total cost. Yet another study worked out cost of human resource as 61.61% of the total budget.  All these differences may reflect the patient mix, severity of disease, complications, staff strength, and length of stay.
The total amount spent on in-patient investigations during the study period was Rs. 55027 ($1210.71) which is 0.61% of the total cost. Investigation cost per patient per day was calculated to be Rs.34.72 ($0.76). The rates of different investigations vary from hospital to hospital. Being a public hospital, only nominal fees for different investigations are charged to patients in SKIMS at out-patient level and in-patients are not charged for investigations as a matter of policy.
The overall indirect cost constituted 4.06% of the total cost. In a study conducted in Belgium the overhead expenses were shown to be 13% of total costs.  In another study conducted in India indirect costs were shown to be proportionately higher than our study, e.g., cost of housekeeping was shown 7% and dietary services as 3-5%.  This could be explained as SKIMS being a public hospital where patients are admitted on nominal admission charges. Furthermore, the charges on electricity, water, Lenin and food which are not charged to the patient were calculated as per the prevailing government rates, which may differ from state to state and country to country. Further the cost of sanitation was also shown less in our study due to the fact that most of the sanitation work is outsourced in our hospital. As overhead cost is only a small fraction of the total cost, it will only have a minor impact on total costs.
The unit cost of in-patient chemotherapy on an average was calculated to be Rs. 5725.12 ($125.96) per patient per bed day. In a developing country like India this cost per patient per bed day appears to be quite high when compared to per capita income of a common man. In a study in Toronto-Bay view Regional Cancer Centre the cost of chemotherapy administered on an out-patient basis over 4-6 months ranged from $260 to $ 5374 (mean, $2224). The total cost of outpatient administration was estimated to be$152.53 per dose, compared with $185.39 for inpatient administration of the same protocol, a difference of 22%.  Cost differences across hospitals do exist and that hospital selection for unit cost estimates can have an impact on the resulting conclusions.  Comparisons between various hospitals for similar services have attracted increased interest in health-care service research. Such comparisons will be most appropriate means of assessing the performance of individual hospitals and they can be used for the purpose of benchmarking. 
| > Conclusion|| |
The unit cost of in-patient chemotherapy on an average was calculated to be Rs. 5725.12 ($125.96) per patient per bed day. In a developing country like India this cost per patient per day appears to be quite high when compared to per capita income of a common man. The major cost components of in-patient cancer chemotherapy are costs of drugs and materials and labor cost. The burden of treatment on the patient is quite high. The percentage cost of drugs borne by the patient out of their own pocket is 40.48% and the cost borne by the hospital is about 5.91%. This means the medicines are the major health expenses borne by the patients out of their own pocket. This indicates that much of the burden of care falls on patient himself and his family even in a public hospital. Modalities in the form of health insurance coverage need to be strengthened for pooling of resources and risks for treatment of these patients.
| > Acknowledgments|| |
The authors express their gratitude to Tariq Ahmad Wani and Firdous Ahmad Wani for their work in compiling and processing the data; to Abdul Khaliq, Mohammad Rafiq, Basher Ahmad and Nisar Ahmad for their efforts in gathering data for this work; to Mr. Zahoor Ahmad and Mr. Nazir Ahmad of Engineering Department and to Firdous Ahmad Wani and Jawahira Akhter for the valuable comments during the final touch of this work.
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[Table 1], [Table 2]