Unit cost of medical services at different hospitals in India

Abstract

Institutional care is a growing component of health care costs in low- and middle-income countries, but local health planners in these countries have inadequate knowledge of the costs of different medical services. In India, greater utilisation of hospital services is driven both by rising incomes and by government insurance programmes that cover the cost of inpatient services; however, there is still a paucity of unit cost information from Indian hospitals. In this study, we estimated operating costs and cost per outpatient visit, cost per inpatient stay, cost per emergency room visit, and cost per surgery for five hospitals of different types across India: a 57-bed charitable hospital, a 200-bed private hospital, a 400-bed government district hospital, a 655-bed private teaching hospital, and a 778-bed government tertiary care hospital for the financial year 2010-11. The major cost component varied among human resources, capital costs, and material costs, by hospital type. The outpatient visit cost ranged from Rs. 94 (district hospital) to Rs. 2,213 (private hospital) (USD 1 = INR 52). The inpatient stay cost was Rs. 345 in the private teaching hospital, Rs. 394 in the district hospital, Rs. 614 in the tertiary care hospital, Rs. 1,959 in the charitable hospital, and Rs. 6,996 in the private hospital. Our study results can help hospital administrators understand their cost structures and run their facilities more efficiently, and we identify areas where improvements in efficiency might significantly lower unit costs. The study also demonstrates that detailed costing of Indian hospital operations is both feasible and essential, given the significant variation in the country's hospital types. Because of the size and diversity of the country and variations across hospitals, a large-scale study should be undertaken to refine hospital costing for different types of hospitals so that the results can be used for policy purposes, such as revising payment rates under government-sponsored insurance schemes.

Figure 1. Contribution of different cost components in total costs of study hospitals, April 2010–March 2011.

The major cost component for the district and tertiary care hospitals is human resources; for the charitable and private hospitals, it is the capital cost; for the private teaching hospital, it is materials cost.

Figure 2. Costs of study hospitals without land cost, April 2010–March 2011.

When land cost (which is beyond control of the hospital administrators) is excluded, human resources cost is the main component of total operating cost for the government hospitals, and materials cost becomes the main component for all other hospitals.