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Costing hospital activity: the experience with healthcare resource groups in England

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  • A. Street
  • D. Dawson

Abstract

Development of an English measure of hospital casemix can be traced back to the early 1980s and has resulted in the creation of healthcare resource groups (HRGs). Despite the availability of this casemix classification system, less use has been made of HRG costs than might be expected, primarily because hospitals are not funded on the basis of their casemix adjusted activity. Instead, the main use of casemix information has been in benchmarking exercises, such as the recent example of the government's use of HRG costs to set hospital efficiency targets. This paper outlines the historical context in which HRGs were developed, the data used for classification purposes and the calculation of HRG costs. The responses of hospitals to efficiency targets based on HRG costs are considered, including the options of improving data quality, reducing costs, and ignoring the targets. It is argued that the latter strategy is most evident in England. Copyright Springer-Verlag Berlin Heidelberg 2002

Suggested Citation

  • A. Street & D. Dawson, 2002. "Costing hospital activity: the experience with healthcare resource groups in England," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 3(1), pages 3-9, March.
    • Handle: RePEc:spr:eujhec:v:3:y:2002:i:1:p:3-9
    DOI: 10.1007/s10198-001-0086-1
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    Citations

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    Cited by:

    1. Papanicolas, Irene & McGuire, Alistair, 2015. "Do financial incentives trump clinical guidance? Hip Replacement in England and Scotland," Journal of Health Economics, Elsevier, vol. 44(C), pages 25-36.
    2. Andrew Street & Kirsi Vitikainen & Afsaneh Bjorvatn & Anne Hvenegaard, 2007. "Introducing activity-based financing: a review of experience in Australia, Denmark, Norway and Sweden," Working Papers 030cherp, Centre for Health Economics, University of York.
    3. Russell Mannion & Andrew Street, 2009. "Managing activity and expenditure in the new NHS market," Public Money & Management, Taylor & Francis Journals, vol. 29(1), pages 27-34, January.
    4. Giorgio Marini & Andrew Street, 2006. "The administrative costs of payment by results," Working Papers 017cherp, Centre for Health Economics, University of York.
    5. Suthummanon, Sakesun & Omachonu, Vincent K., 2008. "Cost minimization models: Applications in a teaching hospital," European Journal of Operational Research, Elsevier, vol. 186(3), pages 1175-1183, May.
    6. Claudia Geue & James Lewsey & Paula Lorgelly & Lindsay Govan & Carole Hart & Andrew Briggs, 2012. "Spoilt For Choice: Implications Of Using Alternative Methods Of Costing Hospital Episode Statistics," Health Economics, John Wiley & Sons, Ltd., vol. 21(10), pages 1201-1216, October.
    7. Marini, Giorgia & Street, Andrew, 2007. "A transaction costs analysis of changing contractual relations in the English NHS," Health Policy, Elsevier, vol. 83(1), pages 17-26, September.

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