Summary: Measuring costs in public hospitals in developing countries is hampered by the lack of an appropriate costing system, or of any systematic cost accounting. Invoices for goods and services, prices for inputs, and patient records are generally absent. As a result, cost measures have historically been based on budget figures - the only available financial data. But budget allocations bear little relationship to the resources actually required to provide services to hospital patients. The patient-based methodology described by the authors circumvents this problem by measuring actual hospital resources allocated to patients. Their study was conducted in a single Dominican hospital during a one week period in April 1989. Their approach documents and gives prices for goods, services, and personnel time provided by the hospital to emergency patients, inpatients, and outpatients. They used the following to measure quality and efficiency: (a) the qualifications and relative costs of medical manpower delivering services; (b) the extent and nature of shortages; (c) comparisons of physician orders and actual services provided; and (d) (for selected diagnoses) the specifics of clinical practices in the hospital, compared with accepted clinical norms for the Dominican Republic. They found that average and total costs of services understate the true costs - because of shortages, inappropriate and underused personnel, and nonfunctioning equipment. Quality of care measures suggest low quality and poor efficiency. Norms of medical practice were not followed in more than 80 percent of the cases examined. Rates of completion for diagnostic tests were below 50 percent for outpatient services and between 60 and 70 percent for inpatient and emergency services. The study registered significant monthly savings of $641 for noncompletion of tests and $824 for nonavailability of drugs. Policy recommendations of the authors center on the need to reform the organization and delivery of health care as well as physician payment practices - and to giving more authority to hospital administrators. To make Dominican hospitals more efficient, there must be greater authority and accountability for hospital directors and better incentives for improving medical and management performance. Quality assurance needs great improvement if the Dominican system is to ensure a basic standard of care.
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