Predicting the Annual Funding for Public Hospitals with Regression Analysis on Hospital’s Operating Costs: Evidence from the Greek Public Sector

Abstract

The funding of public hospitals is an issue that has been of great concern to health systems in the past decades. Public hospitals are owned and fully funded by the government, providing in most countries medical care to patients free of charge, covering expenses and wages by government reimbursement. Several studies in different countries have attempted to investigate the potential role and contribution of hospital and clinical data to their overall financial requirements. Many of them have suggested the necessity of implementing DRGs (Diagnosis Related Groups) and activity-based funding, whereas others identify flaws and difficulties with these methods. What was attempted in this study is to find an alternative way of estimating the necessary fundings for public hospitals, regardless the case mix managed by each of them, based on their characteristics (size, specialty, location, intensive care units, number of employees, etc.) and its annual output (patients, days of hospitalization, number of surgeries, laboratory tests, etc.). We used financial and operational data from 121 public hospitals in Greece for a 2-years period (2018–2019) and evaluated with regression analysis the contribution of descriptive and operational data in the total operational cost. Since we had repeated measures from the same hospitals over the years, we used methods suitable for longitudinal data analysis and developed a model for calculating annual operational costs with an R²≈0.95. The main conclusion is that the type of hospital in combination with the number of beds, the existence of an intensive care unit, the number of employees, the total number of inpatients, their days of hospitalization and the total number of laboratory tests are the key factors that determine the hospital’s operating costs. The significant implication of this model that emerged from this study is its potential to form the basis for a national system of economic evaluation of public hospitals and allocation of national resources for public health.