Cost of medical injury in New Zealand: a retrospective cohort study
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1 Cost of medical injury in New Zealand: a retrospective cohort study Paul Brown, Colin McArthur 1, Lynette Newby 1, Roy Lay-Yee, Peter Davis 2, Robin Briant Department of Community Health, University of Auckland; 1 Auckland District Health Board; 2 Christchurch School of Medicine, University of Otago, New Zealand Objective: To estimate the cost of treating medical injury associated with hospital admissions in New Zealand and the patient characteristics of costly adverse events. Methods: As part of the New Zealand Quality in Healthcare Study (NZQHS), a retrospective examination of medical records in 13 public hospitals identi ed the occurrence of clinical procedures and hospital bed days attributable to adverse events. The prices charged to foreign patients were used to estimate the cost of the health care resources used. Results: 850 adverse events were identi ed in the NZQHS which cost an average of $NZ 264 per patient. For New Zealand, adverse events are estimated to cost the medical system $NZ 80 million, of which $NZ 590 million went toward treating preventable adverse events. The results suggest that up to 30% of public hospital expenditure goes toward treating an adverse event. The results also suggest that older patients, neonates and those with moderately serious co-morbidity tended to have more costly adverse events. Conclusions: Adverse events lead to a signi cant use of health care resources in New Zealand. These ndings suggest that substantial resources could be saved by eliminating preventable adverse events. Journal of Health Services Research & Policy Vol Suppl 1, 2002: S1:29 34 # The Royal Society of Medicine Press Ltd 2002 Introduction Paul Brown PhD, Senior Health Economist, Roy Lay-Yee MA, Data Analyst, Robin Briant MBChB, Clinical Director, Department of Community Health, University of Auckland, Private Bag 92019, Auckland, New Zealand. Colin McArthur MBChB, Lynette Newby BHSc, Division of Critical Care, Auckland District Health Board, New Zealand. Peter Davis PhD, Professor of Public Health, Department of Public Health and General Practice, Christchurch School of Medicine, University of Otago, New Zealand. Correspondence to: PB. A number of studies have demonstrated that medical injuries (also called adverse events) represent a signi - cant drain on health care resources: adverse events cost the New York health care system US$161 million (in 1989 dollars), 1 the Australia government over AU$900 million in 1995, 2 the states of Utah and Colorado over US$348 million, 3 and Britain over 2400 per adverse event (Table 1). 4 The recently completed New Zealand Quality in Healthcare Study (NZQHS) identi ed the occurrence, impact and preventability of adverse events associated with hospital admissions in To date, no study has modelled the relationship between the patient characteristics and the cost of the adverse event (although the relationship between cost and different types of adverse events has been reported). 6 We created a predictive model of the health care costs associated with adverse events using patient information available to doctors (gender, age, ethnicity, socioeconomic status, co-morbidity) and the severity of the adverse event. This information can assist hospital staff and other health professionals in identifying patients who are likely to require lengthy hospitalisations or extensive procedures. As in previous studies, this study highlights the cost of preventable adverse events as this provides an indication of the savings that might be available from successful interventions. It also examines the patient characteristics associated with costly adverse events. Method A retrospective, two-stage review was carried out on 659 medical records in 13 public hospitals with 0 or more beds in New Zealand. 5 The sample was a representative selection of approximately 1% of inpatient admissions (excluding day, psychiatric and rehabilitation-only cases) during To determine whether an admission was associated with an adverse event, a team of trained registered nurses and doctors applied the standardised protocol used in previous studies. 2, 9 An adverse event was operationally de ned as an unintended injury resulting in temporary or permanent disability, including increased length of stay and/or nancial loss to the patient, that was caused by clinical management rather than the underlying disease process. The event was deemed preventable if the doctors agreed that it was due to a failure to follow accepted practice at the individual J Health Serv Res Policy Vol Suppl 1 July 2002 S1:29
2 Cost of medical injury in New Zealand Table 1 Previous studies examining cost of adverse events Study Proportion of adverse events Number of cases examined Proportion of preventable adverse events Health care cost New York 1 3.% (94 for costs) N/A US$3.8 billion Colorado and Utah 3 2.9% % US$661 million Australia % % AU$ 900 million London 4.8% % or system level. The adverse event could have originated as the result of care inside the hospital or outside (e.g. general practice), but all were associated with an indexed hospital admission in Twenty percent of the adverse events occurred prior to 1998 but were part of the indexed admissions of As the cost of these adverse events was associated with the admission of 1998, they were included in the sample. The general approach to estimating the cost of adverse events is to identify the additional resources used and then apply a charge or cost to those resources. In the current study, the procedure for identifying the additional health care resources was:. Number of additional bed days attributable to the adverse event. Following the initial determination of the adverse event, the doctors estimated from the medical records the additional number of bed days attributable to the event.. Identi cation of hospital ward. Using the doctor s description of the adverse event, two investigators (CM and LN) identi ed the ward or area in the hospital where the patient spent the extra bed days. When patients spent time in multiple wards, the speci c number of days in each ward was recorded.. Additional procedures. Using the doctor s description, two investigators (CM and LN) identi ed the additional procedures that were undertaken as a result of the adverse event. Only those procedures deemed not normally performed as part of routine stay on the speci c ward were included, such as additional surgery or specialised procedures. The doctors applied the criteria used in the Australian and New York studies for identifying the number of bed days attributable to the adverse event. 5 As a check of the consistency of the assessments of the ward and additional procedures, the two investigators (CM and LN) compared assessments of % of the cases. There were no signi cant areas of disagreement. Cases deemed to be complicated were discussed. We produced a list of the number of the bed days by hospital ward and additional procedures deemed not part of the normal care on the ward. Due to the retrospective nature of the data, it was not possible to identify the speci c consumable resources attributable to each patient. Instead, we used the price charged by Auckland Hospital to non-national patients for a bed day on the speci ed ward and for the speci ed procedures in The total health care expenditure associated with an adverse event was calculated for each patient. Individual costs were summed across and then multiplied by 0 (the sample was 1% of all hospital admissions for that year) to yield an estimate of the cost for New Zealand. It was not possible to identify indirect costs (such as lost wages and household productivity losses). P revious studies found these to be signi cant, representing nearly 48% of the total cost in Colorado and Utah. 3 We report an estimate based on the assumption that the ratio of health care to other costs (0.48/0.52) is similar in New Zealand. A predictive model was constructed to identify the patient characteristics associated with costly adverse events. As with most data on hospital costs, the distribution of cost data are highly skewed. Thus, the log of cost was used as the dependent variable in the regression analysis. The information available to hospital staff was used as independent variables:. Patient demographic information. Age, gender and ethnicity were taken from medical records by the doctors.. Socioeconomic status. The domicile code was taken from medical records. This information was subsequently linked to NZDep96, an area-based index of socioeconomic deprivation to provide a measure of the relative deprivation of the area in which the patient resided. 11. Illness. Co-morbidity prior to the adverse event was assessed by the doctors based on the patient s medical history, including reason for admission and overall illness status.. Severity of adverse event. Assessed by the doctors based on the degree and duration of disability resulting from the adverse event. The model was estimated using ordinary least squares regression for the overall sample of adverse events and for the sub-sample of preventable adverse events. Results Epidemiology of adverse events The NZQHS identi ed 850 (12.9%) adverse events from the review of 659 medical records. Of the 848 cases identi ed that had suf cient information for costing, 3 (3%) were determined by the reviewing doctors to have not been preventable. The remaining 538 (63%) were rated as having some degree of preventability. Of the 848 cases, 56 (89%) required at least one additional bed day. The average additional stay was 9.1 S1:30 J Health Serv Res Policy Vol Suppl 1 July 2002
3 Cost of medical injur y in New Zealand Original research days per patient admission. The average additional stay for patients with preventable adverse events was slightly higher (.1 days per patient). Forty-three per cent (365) of the patients required an additional procedure as a result of the adverse event, the most common of which was surgery, 204 (23%). The rate of surgery was similar for patients with preventable adverse events (22%). As for the long-term effects of the adverse event, 62% were rated as having minimal or no disability (effect lasting less than one month) and 19% with moderate disability (lasting from one to 12 months). Ten percent had some degree of permanent disability and 4% died as a result of the adverse event. It was not possible to determine the outcome for the remaining 5% of the events. Costs of adverse events The health care cost was NZ$ 264 (Table 2). This included an average of $966 in bed day cost (ranging from $0 to over $ ) and $498 in additional procedures (ranging from $0 to over $12 000). For those events deemed preventable the average cost per patient was $11 024, ranging from $0 to over $ The average cost of non-preventable adverse events was $8933, ranging from $0 to just over $ Total health care costs for New Zealand are shown in Table 2. The total out-of-hospital costs are estimated to be $944 per patient making the total cost per patient $ For the country as a whole, the total cost of adverse events was over $1.6 billion (Table 2). Predictive model of cost per patient Patient char acter istics The average age of a patient suffering an adverse event was 51 years. As shown in Table 3, adverse events involving neonates were associated with the highest average cost ($20 531), while those involving year olds had the lowest ($381). For those events deemed preventable, average costs were higher for most age groups with neonates associated with the highest average cost ($26 69). Women (Table 4) were associated with less costly adverse events than men ($8985 versus $11 851). Costs for both men and women were higher when the adverse event was preventable ($ 089 and $12 206, respectively). Fifty-three percent of the patients had some degree of co-morbidity. The 38% whose co-morbidity was rated as moderately serious had an average cost of $ (compared with $8053 for patients with no co-morbidity). Patients rated as having very serious co-morbidity were associated with costs of $ All costs were higher if the adverse event was deemed preventable. Europeans were associated with the highest costs ($ 611), compared with Maori ($9983) and Paci c people ($156). Individuals who reside in the least deprived areas (decile 1) had an average cost of $9634, while those in the most deprived areas (decile ) had a cost of $ Overall, the average cost of individuals in relatively more deprived areas (deciles 6 ) was slightly higher ($ 65) than those from less deprived areas (deciles Table 2 Total mean cost (standard deviation) of adverse events (n ˆ 848; NZ dollars) Bed day costs Additional procedures Total cost Health care costs per person Health care costs for New Zealand Health care and other costs for New Zealand (Assumes health care costs are 52% of total costs) All events $966 * (18 093) $498 (963) $ 264 (18 443) Preventable events (63%) $ 546 (18 956) $48 (942) $ (19 259) All events $ $ $ Preventable events (63%) $ $ $ $ Table 3 Average cost of adverse event by age group (NZ dollars) Age groups All adverse events Preventable adverse events % Cost % Cost Neonates 3.2 $ $ years 5.2 $ $ ^9 1.9 $ $6 1 ^ $ $ ^ $ $ ^ $ $ 95 40^ $ $ ^ $ $ ^ $ $ ^9 1.1 $ $ years 16.4 $ $12 68 n ˆ 848 n ˆ 538 J Health Serv Res Policy Vol Suppl 1 July 2002 S1:31
4 Cost of medical injury in New Zealand Table 4 Average cost of adverse event by gender, co-morbidity, ethnicity and deprivation (NZ dollars) All adverse events Preventable adverse events % Cost % Cost Gender Female Male Co-morbidity None Mod. serious Very serious Ethnicity European Maori Pacific Other Deprivation Decile 1 Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile Decile 8 Decile 9 Decile $8 895 $ $8 053 $ $11 58 $ 611 $9 983 $ 156 $8 815 $9 634 $ 0 $6 99 $ $ 11 $ $9 35 $11 22 $9 055 $ n ˆ 848 n ˆ 538 $ 089 $ $8 065 $13 20 $16 49 $ $9 60 $8 933 $ 590 $11 08 $ $ 990 $ 084 $ 1 $ $9 99 $ $ 059 $ : $9602). A similar pattern was exhibited for preventable adverse events ($ and $ 4, respectively). Severity of adverse event As shown in Table 5, 62% of the individuals suffered no or minimal disability as a result of the adverse event. The average cost for these patients ($5235) was far below the average cost for the 33% of patients who suffered some degree of disability or death as the result of the adverse event. Patients who suffered a moderately severe outcome had an average cost of $ For those with permanent disability, the average cost ($2 415) was over ve times the average cost of patients with no disability. The average cost of those who died was $ The average costs were greater for those whose adverse event was preventable. Estimation results The results from the estimation are shown in Table 6. The results shown in columns one and two are for the entire sample of adverse events, those in columns three and four for preventable adverse events. Looking at the entire sample (columns one and two), the results suggest that the cost of the adverse event increases signi cantly with age (t ˆ 3.31, P50.001). Costs do not vary with ethnicity, deprivation of area, or with gender. The presence of moderately serious co-morbidity (t ˆ 2.9, P50.01) was associated with higher costs but the signi cance of very serious co-morbidity depended upon the inclusion of other variables. When patient characteristics are viewed in isolation of the severity of the adverse event (column one), having serious comorbidity is not a signi cant predictor of cost. Severity is a predictor of cost, with moderate and permanent disabilities being associated with increasing costs (t ˆ 3.8, P50.01 and t ˆ 4.8, P50.01, respectively) and death with signi cantly lower costs (t ˆ 2.03, P50.01). The measures of severity are also signi cant predictors of cost when the analysis is restricted to only those adverse events deemed preventable (columns three and four). Increased costs are associated with age (t ˆ 2.32, P50.05), neonates (t ˆ 2.3, P50.05), a moderate (t ˆ 3.01, P50.01) and serious co-morbidity (t ˆ 3.21, Table 5 Average cost by severity of adverse event (NZ dollars) Adverse event severity All adverse events Preventable adverse events % Cost % Cost No or minimal disability 62 $ $5 388 Moderate disability 19 $ $ Permanent disability $ $ Death 4 $ $15 89 Unknown outcome 5 $ $ n ˆ 848 n ˆ 538 S1:32 J Health Serv Res Policy Vol Suppl 1 July 2002
5 Cost of medical injur y in New Zealand Original research Table 6 Regression results: predicting log of cost of adverse event Dependent variable: log of cost All adverse events Preventable adverse events Independent variables Coe cients Coe cients Intercept.13 (0.358) (0.350) Age * * (0.004) (0.004) Neonate ** 0.9 ** (0.555) (0.534) Female (0.189) (0.183) Maori (0.24) (0.265) Pacific (0.512) (0.495) Other ethnicity (0.415) (0.402) Moderately serious co-morbidity * * (0.206) (0.200) Very serious co-morbidity ** (0.2) (0.268) Deprivation (0.036) (0.035) Adverse event severity ^ moderate disability * (.239) ^ permanent disability 1.48 * (.309) ^ death 2.03 * (.449) Column 1 Column 2 Column 3 Column (0.442) * (0.005) * (0.3) (0.234) (0.351) (0.603) 1.0 * (0.46) 0.39 * (0.245) 1.3 * (0.408) 0.02 (0.045) (0.429) * (0.005) 1.42 * (0.41) (0.223) (0.334) (0.5) * (0.456) * (0.236) 1.31 * (0.390) (0.043) * (0.283) 1.6* (0.401) * (0.485) r 2 ˆ 0.03 r 2 ˆ 0. r 2 ˆ 0.06 r 2 ˆ 0.14 n ˆ 848 n ˆ 839 n ˆ 538 n ˆ 533 Standard errors shown in parentheses * P50.05; ** P50.1 Dummy variables were used to indicate whether the patient was a neonate, gender ( ˆ1 if female), ethnicity, degree of co-morbidity (moderately serious or very serious) and severity of adverse event (moderate disability, permanent disability and death) P50.01) both without (column three) and with (column four) inclusion of the severity of the adverse event. Discussion Treating adverse events costs hospitals over $80 million a year. Given that the total expenditure on care in public institutions in New Zealand was approximately $2.9 billion in 2001, 12 about 30% spent by a public institution goes towards treating an adverse event. Of this, $590 million are spent treating preventable adverse events. The predictive model highlights populations (elderly with co-morbidity) where the greatest bene t could result from successful interventions to reduce the occurrence of adverse events. When considered in conjunction with the cost of developing and implementing such measures, the information is useful in identifying their net cost. Cost information might also serve as a surrogate measure of the pain and discomfort associated with the hospital stay. The main driver of cost is the additional days spent in hospital. Assuming that pain and suffering from an adverse event is correlated with length of stay in the hospital, the predictive model suggests the characteristics of patients who experience high levels of pain and discomfort as a result of adverse events. This information can complement injury and disability assessments in identifying the total impact of the adverse event on the patient. The results from the predictive model are broadly consistent with studies examining the characteristics associated with high hospital or treatment costs For instance, Graves found that the cost of hospital care tends to increase with the age of the patient (although care for neonates tends to be especially costly) and for patients with a moderately severe co-morbidity, and costs tended to be lower if the patient subsequently died. 15 In contrast with our ndings, he found that gender and severe co-morbidity were not associated with higher costs. Thus, while the patterns are similar, there are differences between the patient characteristics associated with high hospital costs in general and those speci cally relating to adverse events. The method used in this study to estimate health care costs (retrospective analysis of hospital cost records) is similar to that employed in previous studies. However, there were differences between the studies in the types of resources that were measured and the method for valuing those resources. In the New York study, the investigators augmented the retrospective analysis ( ve J Health Serv Res Policy Vol Suppl 1 July 2002 S1:33
6 Cost of medical injury in New Zealand years after the event) of the medical records with survey information on 94 patients on health care usage and other direct costs (such as lost wages and lost household production). 1 Market prices were then applied to the resources and lost income. In the Australian study, the cost of the adverse event was obtained by multiplying the number of bed days attributable to the adverse event by an average per day cost based on the initial Diagnosis Related Group. 2 In the Utah and Colorado study, the investigators used patient records to estimate health care utilisation, including both inpatient and ambulatory services, applying market prices to obtain a nal value. 3 Patient demographic information was linked with census records in order to obtain estimates of lost productivity and wages. In the British study, investigators considered only additional bed days, applying a per diem cost supplied by the hospital. 4 The current study uses per diem costs by specialty ward 16 and includes the cost of additional procedures not included in the ward charges. There are a number of limitations of this methodology. First, due to the lack of detail in hospital records, it was not possible in the present study to use a micro or bottom-up costing technique. If patients who have suffered an adverse event require more resources than normal care, then the use of per diem costs may understate the cost of the adverse event. A second problem with the current study concerns the timing of the adverse event. Although the NZQHS identi ed the adverse events associated with sampled admissions in 1998, some costs were incurred in 199 or 1999 (an adverse event occurring in 1998 but resulting in additional hospital days in 1999 would have been included). Although few in number, their presence slightly in ates the estimated cost of treating adverse events in a given year. A third limitation relates to the costings. There is no internal competition in New Zealand for a wide range of hospital services. Nor is detailed costing information available for New Zealand s hospital services. The decision to use non-national charges was made because there is an active market in providing hospital services to patients from Australasia. However, it is unclear how responsive these prices are to international (e.g. exchange rate) or domestic (e.g. government initiatives) events or the degree of competition for services. The results should be seen purely as an indication of the cost of adverse events. To date, no study has conducted a detailed quality of life assessment of adverse events. Rather, the seriousness of the adverse event is typically determined by the extent of permanent disability (including lost future wages and household production costs) that results. This measure ignores the pain and suffering resulting from treatment in the hospital. Since the majority of patients suffer no or minimal disability as a result of the adverse event (and yet may still be subjected to invasive treatments and extended length of stay), disability alone does not provide an accurate assessment of the total effect of the adverse event. Future studies should examine both the decreased quality of life that results from adverse events and, equally important, the characteristics of the hospital environment and medical professionals behaviour that gave rise to the event. References 1. Johnson W, Brennen T, Newhouse J, Leape L, Lawthers A, Hiatt H, Weiler P. The economic consequences of medical injury: implications for a no-fault insurance plan. JAMA 1992; 26: Wilson R, Runciman WB, Gibberd RW, Harrison B, Newby L, Hamilton J. The Quality in Australian Health Care Study. Medical Journal of Australia 1995; 163: Thomas E, Studdert D, Newhouse JP, Zbar BW, Howard KM, Williams EJ, Brennan TA. Cost of medical injuries in Utah and Colorado. Inquiry 1999; 36: Vincent C, Neale G, Woloshynowych M. Adverse events in British hospitals: preliminary retrospective record review. BMJ 2001; 322: Davis P, Lay-Yee R, Briant R, Schug S, Scott A, Johnson S, Bingley W. Adverse events in New Zealand public hospitals: principal ndings from a national survey. New Zealand Ministry of Health Occasional Paper Series No. 3, 2001 (Available from: moh.nsf) 6. Rigby K, Clark RB, Runciman WB. Adverse events in health care: setting priorities based on economic evaluation. Journal of Quality in Clinical Practice 1999; 19: 12. Brennan TA, Leape LL, Laird NM, Hebert L, Localio AR, Lawthers AG, et al. Incidence of adverse events and negligence in hospitalised patients: Results of the Harvard Medical Practice Study I. New Engl J Med 1991; 324: Leape LL, Brennan TA, Laird NM, Lawthers AG, Localio AR, Barnes BA, et al. The nature of adverse events in hospitalized patients: Results of the Harvard Medical Practice Study II. New Engl J Med 1991; 324: Localio AR, Lawthers AG, Brennan TA, Laird NM, Hebert L, Paterson LM, et al. Relation between malpractice claims and adverse events due to negligence: Results of the Harvard Medical Practice Study III. New Engl J Med 1991; 325: Jackson T. Cost estimates for hospital inpatient care in Australia: evaluation of alternative sources. Australian and New Zealand Journal of Public Health 2000; 24: Crampton P, Salmond C, Sutton F. NZDep96: Index of Deprivation. Report No 8, Wellington: Health Services Research Centre, New Zealand Ministry of Health. Health Expenditure Trends in New Zealand: 1980 to Wellington: Ministry of Health, Caro J, Huybrechts K, Kelley H. Predicting treatment costs after ischemic stroke on the basis of patient characteristics at presentation and early dysfunction. Stroke 2001; 32: Knapp M, Beecham JA. Reduced listing cost: Examination of an informed short cut in mental health research. Health Economics 1993; 2: Graves N. Estimating the cost of hospital acquired infection, unpublished PhD dissertation, University of London, Donaldson C. The state of the art of costing health care for economic evaluation. Community Health Studies 1990; 14: S1:34 J Health Serv Res Policy Vol Suppl 1 July 2002
M any of the basic parameters in the epidemiology of
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