Promoting Excellence : Cost Accounting Recommendations to the Field : Summary and Conclusions

Cost analyses for palliative and end-of-life health care programs represent only one dimension of program evaluation conducted to inform leaders in health care systems, locally and nationally, and policy-makers in making difficult decisions. Access to care and quality of care are also factors. It is typical to hope that there will be a negative relation between total costs and quality—that doing a better job by spending more in one area will result in lower total costs. While this holds for immunizations and selected preventive health services, it has infrequently been true for curative health services. Higher quality care typically costs more, although spending more doesn't always ensure higher quality.

Some organizations are reluctant to engage in cost evaluations that could be misinterpreted as a move to reduce or withhold services. Several large health systems are expanding palliative and end-of-life interventions "on faith," because they have determined it is the "right thing to do," without hypothesizing or examining differences between program participants and non-participants in resource utilization, survival or costs. Other organizations may wish to examine the costs of palliative and end-of-life care programs only in relation to effects on the measurable impact on quality of patient care. Such analyses seek to determine the cost-effectiveness of specialized care programs and interventions, ideally comparing not only their costs but also the outcomes of care for patients who are and are not enrolled in the program.

If the program under study is already included as a funded benefit, some stakeholders may use cost information to argue for an expansion in coverage or increases in insurance pricing, reimbursement or per member per month capitated payments. Others may use the same information to justify cost reductions. In this regard, some hospice executives worry that the Centers for Medicare and Medicaid Services (CMS) requirement for hospice cost data could be the first step toward reducing reimbursement under the Medicare Hospice Benefit. As these examples illustrate, stakeholders in cost analysis may have competing interests.

It is possible that increased spending on palliative and end-of-life care through a well-designed program may be associated with higher quality care and lowered total costs—a positive return on investment—over some range of time and program expense. If so, there also may well be a point of diminishing returns beyond which more service is associated with higher costs, with or without higher quality. These possibilities warrant careful study.

It is the Cost Accounting Peer Workgroup's expectation that this set of recommendations will be a step toward better assessment of the costs and cost-effectiveness of programs to improve care, comfort and quality of life for seriously ill or injured patients and their families. In striving locally and nationally to make responsible decisions in allocation of limited resources, it is essential to understand the interplay of access, quality and costs. Sound and consistent accounting practices are critical to advancing improvements in care through the end of life.

Evaluation of current cost accounting methods and subsequent recommendations for practice should take the following four factors into consideration:

  • The time needed to conduct rigorous analyses with the time frame for decision making;
  • The budget and resources available to analysts for conducting a comprehensive cost analysis;
  • The recognition that costs are only one health service delivery outcome, and that the context of the study and the impact on access to services and quality of care must always be considered; and
  • The realization that costs are only one factor that drives health system and public policy decision making; however, the consideration of costs is essential to responsible health service delivery.

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Promoting Excellence in End-of-Life Care was a national program of the Robert Wood Johnson Foundation dedicated to long-term changes in health care institutions to substantially improve care for dying people and their families. Visit PromotingExcellence.org for more resources.

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