Recent British governments have stressed the importance of achieving greater cost efficiency in the nation's health service, but the information which is currently available is largely unsuited to the needs of more effective management. This is particularly the case with hospital inpatient costs, which form the single most important component of a health authority budget. An understanding of the structure of these costs and their implications for service planning and management are crucial given the current financial environment in which health authorities find themselves. In this paper, approaches to estimating hospital costs are reviewed in more detail and a new approach being developed at Leeds is outlined.
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