Economic Evaluation of a Hospital-Based Palliative Care Program

Abstract

Purpose: Establish costs of an inpatient palliative care unit (PCU) and conduct a threshold analysis to estimate the maximum possible costs for the PCU to be considered cost effective. Methods: We used a hospital perspective to determine costs on the basis of claims from administrative data from Johns Hopkins PCU between March 2013 and March 2014. Using existing literature, we estimated the number of quality-adjusted life years (QALYs) that the PCU could generate. We conducted a threshold analysis to assess the maximum costs for the PCU to be considered cost effective, incorporating willingness to pay ($180,000 per QALY). Three types of costs were considered, which included variable costs alone, contribution margin (ie, revenue minus variable costs), and PCU cost savings compared with usual care (from a separate publication). Results: The data showed that there were 153 patient encounters (PEs), variable costs of $1,050,031 ($1,343 per PE per day), a contribution margin of $318,413 ($407 per PE per day), and savings compared with usual care of $353,645 ($452 savings per PE per day). On the basis of the literature, the program could generate 3.11 QALYs from PEs (0.05 QALY) and caregivers (3.06 QALYs). The threshold analysis determined that the maximum variable cost required to be cost effective was $559,800 (an additional $716 per PE per day could be spent). Conclusion: According to variable costs, the PCU was not cost effective; however, when considering savings of the PCU compared with usual care, the PCU was cost saving. The contribution margin showed that the PCU was cost saving. This study supports efforts to expand PCUs, which enhance care for patients and their caregivers and can generate hospital savings. Future research should prospectively explore the cost utility of PCUs.