Cost Accounting Workgroup

Mission Statement: To identify methods of measuring end-of-life health care resource use and costs; examine the incidence of those costs on providers and public health programs; and to develop new methods by bringing together experts working on cost analysis.

Formed in the Fall of 2000, the Cost Accounting Workgroup's purpose was to identify accurate and meaningful methods of measuring end-of-life health care resource use and costs, and to apply those methods to actual end-of-life care case examples. Chaired by Stephen Seninger, Ph.D. (Professor and Director of Economic Analysis at the University of Montana's Bureau of Business and Economic Research), the 15-member group was composed of professional health economists, health policy researchers, clinician-researchers involved in innovative end-of-life care demonstration projects, and other experts from public and private sector organizations.

Efforts to improve care for dying Americans have generated new models in recent years. Evaluating cost effectiveness and costs associated with interventions are essential to identifying directions for program and policy improvement and to determining program effectiveness. Evaluating costs associated with end-of-life care programs is challenging. Often studies are based upon arbitrary criteria, measures of convenience and in some cases, questionable assumptions. Most current methodologies do not allow for meaningful comparisons across types of systems, variations in program structure, different years, institutional environments or geographic locations. These wide variations suggest the need to identify guidelines for cost measurement in end-of-life care that take cost, access and quality of services into account.

The Workgroup approached the challenges of accurately and meaningfully measuring the economic costs of end-of-life care in the following ways:

• Identifying cost accounting issues most frequently encountered in measuring end-of-life care costs;
• Identifying principles and cost measurements that meet established economic cost accounting standards; and that are meaningful in advancing policy and clinical practice;
• Making recommendations for methods of addressing cost accounting issues;
• Illustrating recommended approaches with applied end-of-life examples.

Workgroup members brought a variety of methodological, data and institutional perspectives to discussions of cost accounting and measurement. Health economists provided economic definitions of health care resource use and end-of-life care costs. Project directors offered applied examples of cost issues and data availability. Medical clinicians identified numerous challenges in measuring end-of-life care in different health care delivery settings.

Deliberations were guided by the workgroup's desire to:

1. Identify and share information and specific guidelines, cost methodologies and measurement tools for costing of end-of-life care;
2. Identify gaps and methodological issues in the current state of the art and literature on cost measurement for end-of-life care;
3. Recommend general, practical cost measurement guidelines of end-of-life care that are useful to applied research and evaluation with the intention of helping others gather useful data; and increase the number of studies and evaluations that meet minimum criteria for subsequent analysis and comparisons.

The Workgroup's evaluation of current cost accounting methods and subsequent practice recommendations took the following into consideration:

• Time needed to conduct rigorous analyses within the decision-making timeframe;
• Recognition that costs are only one outcome of several, including quality of care and access to care;
• Budget and resources available to analysts to conduct comprehensive cost analyses;
• Realization that factors other than cost may drive decision making.

Workgroup members operated within a comprehensive social cost perspective framework that acknowledged family and caretaker costs and took health care resources and foregone earnings into account. However, Workgroup members focused primarily on resources and economic costs within different health care delivery systems with some initial data available for developing cost accounting practice standards. The fact that different studies reflect different perspectives does not make them 'wrong' but Workgroup members agreed that it is incumbent upon researchers and authors to acknowledge and discuss the limitations of their studies. A cost evaluation must articulate a study's purpose and identify which stakeholders' perspective(s) are reflected.

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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.