Comparison of Cost Structure,Package Rates and Financial Feasibility for Selected Surgeries Covered under Social Health Insurance Schemes

Abstract

Social Health Insurance Scheme is an important innovation in health financing in India. The present study analyzed the cost and net realization by a multi-specialty/tertiary care hospital in treating the patients covered under two of the most successful Social Health Insurance Schemes—Yeshasvini and Kalaignar. A comparative analysis of the cost structure, package rates sanctioned by the schemes and the financial feasibility of the schemes for 210 surgeries in 12 specialties was conducted in a large hospital. In general, cost of consumables and manpower constituted nearly 70 per cent of the total cost. Only in four surgical categories, the tariff rate was adequate to meet the direct cost of care. Implications for improving net realization by the hospital as well as the scheme policy are discussed.

Study Objectives

1. To carry out a comparative analysis of the cost structure of the major procedures in the hospital covered under Yeshasvini and Kalaignar schemes;

2. To compare the cost structure/s incurred by the hospital with the package rates approved by the schemes to evaluate the financial feasibility of the schemes across various departments of the hospital; and

3. To suggest measures to reduce the costs of production for various procedures without negatively impacting the quality of care and, thereby, reduce the gap between the costs incurred by the hospital and the realization from the schemes.

Methodology

The cost incurred by the hospital in treating the patients covered under the two schemes—Yeshasvini and Kalaignar—for 210 surgical cases was analyzed. The costs of various resources on a per-patient basis including consumables, manpower, electricity, equipment, and use of facilities in and around the hospital were computed. Net realization by the hospital in the corresponding surgeries was computed by taking the approval amount (package rates) and total cost of care. The analysis was carried out for both the schemes by classifying data as ‘cardiac’ and ‘non-cardiac’ procedures.

Results and Conclusions

In general, Kalaignar scheme showed better cost recoveries than Yeshasvini scheme for similar types of cardiac and non-cardiac procedures. In all the cases studied, the major costs were attributable to cost of medicine and consumables and cost of manpower. The cost of medicine and consumables in cardiac and non-cardiac surgeries was 37 per cent and 29 per cent of the total cost, respectively. Manpower costs in the two types of surgeries were 42.5 per cent and 47.5 per cent, respectively. Net realization for all surgeries studied, showed that cardiac cases gave a better cost recovery than non-cardiac categories. It was observed that only 4 of the 12 surgical procedures studied posted earnings more than the total cost indicating low financial viability for the hospital.

Implications for managers for reducing losses to the hospital are discussed. Large-scale studies on costing for various procedures across the networked and non-networked hospitals are warranted for revising package rates by the social insurance schemes.