Cost Per Patient Day Equivalent in District Hospitals

Health Systems Trust

This indicator measures how the resources available to the hospital are being spent and is a marker of the efficiency of the hospital as a whole. It is a composite process indicator in that it links financial data with service-related data from the hospital admissions and outpatients.

The indicator measures the average cost per patient, per day, seen at a district hospital, and is expressed as Rands per patient day equivalent. The indicator value is calculated by dividing the total expenditure1 of the hospital by the patient day equivalent (PDE)2. The PDE is calculated by adding the number of inpatients plus 1/2 of day patients plus 1/3 of outpatient and emergency room visits3.

Cost per PDE reflects whether a particular hospital is being optimally managed. It measures and compares the inputs (total financial resources available to the hospital) with the outputs (volume of patients seen). Cost per PDE is also a means of intra- and inter-district comparison with other similar hospitals.

In 2008/09, the average cost per PDE in South Africa for all district hospitals was R1096. This is lower than the 2007/08 figure of R1140 and suggests that managers are becoming more conscious of costs and that district hospitals, generally, are being managed more efficiently.

Figure 1, Cost per patient day equivalent (district hospitals) by district, 2008/09, shows the wide range of cost per PDEs across the 52 districts from a high of R1900 in Namakwa (NC) to a low of R681 in Siyanda (NC)- an almost three-fold difference. The very wide fluctuations in values in the Northern Cape over the past four years (as illustrated in Figure 4, Trends in cost per patient day equivalent in district hospitals, 2005/06 - 2008/09) are indicative of either inadequate quality of data or a low PDE value where small changes can make a big difference to the cost per PDE.

Both Figures 1 and 4 show that there are wide intra-provincial variations in 2008/09 and over the past four years. As most districts contain a number of district hospitals, these district variations conceal the much greater variations that exist between individual hospitals. To illustrate this point, in Zululand (KZN) the district average cost per PDE in 2008/09 was R1094. Within the district there are five district hospitals whose cost per PDE vary in range from Vryheid Hospital at R818 to Nkonyeni Hospital at R1673 - a difference of over 100% between the two hospitals. Similar and even greater differences between the cost per PDE values can be seen in most districts. These differences require investigation by hospital, district, provincial and national managers.

Figure 2, Cost per patient day equivalent (district hospitals) by metro district, 2008/09, shows that the average cost per PDE of R1115 in the metro districts is similar to the national average. In the interests of equity and efficiency, districts must review the higher than average expenditure in Nelson Mandela Bay Metro (EC) and City of Tshwane (GP) and the lower than average in eThekwini (KZN).

The average cost per PDE in the 12 ISRDP districts is R964, as illustrated in Figure 3, Cost per patient day equivalent (district hospitals) by ISRDP district, 2008/09. This figure is about 12% below the South African average of R1096, with 10 of the 12 ISRDP districts having values below the national average. This may be due to lower costs (e.g. staff costs with fewer doctors serving in more junior positions) or increased PDEs (e.g. keeping patients in hospitals for longer periods because of difficulties with transport home). It is important for managers to understand the reasons for these differences to ensure both an equitable and an efficient use of resources.

Figure 1*:

* Metsweding has no district hospital and thus has a zero value for this indicator.

Figure 2:

Figure 3:

Figure 4:

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References:

  1. Only expenditure on Budget Programme 2: District Health Services has been included, thus excluding major capital expenditure and expenditure by some hospitals that offer both district- and provincial-level services.
  2. Expenditure for previous years (2005/06 2007/08) has been adjusted for inflation. All figures are thus presented in real 2008/09 prices.
  3. The PDE is a measure of the volume of patients but because not all patients spend a full day (from midnight to midnight) at the hospital, (there are day patients, outpatients, and emergency room visits that add to the workload of the hospital), this formula is used to calculate the equivalent number of 24-hour patients.

 

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Resources:

The indicators in these sections are calculated from the Basic Accounting System (BAS) data obtained from National Treasury, North West Province's financial data, National Treasury data on Local Government expenditure, the current DHIS mid-2008 population estimates and the 3-year rolling average of medical aid coverage calculated using the General Household survey data 2005-2007.

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The downloadable pdf version of this article can be found at http://www.hst.org.za/publications/864

The undelying data spreadsheets can be found at http://www.hst.org.za/publications/864