Methods for patient-level costing in the VA system: are they applicable to Canada?

In his article “Determination of VA Health Care Costs,” Barnett (2003 [this issue]) describes various methods available to estimate costs in the U.S. Veterans Affairs (VA) health care system. These methods include direct measurement, pseudo bills combining VA patient-level utilization data and non-VA cost lists, cost functions based on regression analysis using non-VA cost estimates, and average cost databases. The need for these methods arises from the fact that VAhospitals do not prepare patient bills, the primary source of health care costs used in U.S. health economic studies. Barnett (2003) suggests that the principles of cost determination described in his article can be applied to other settings where billing data are not available. This is the case in Canada, where acute-care hospitals are publicly funded through global operating budgets. Because very few hospitals have information systems that produce reliable patient-level costing data, Canadian health economists rely on similar cost-estimation methods to those detailed by Barnett. The parallels between VAhealth care costing methods and those used by Canadian investigators are detailed in the remainder of this commentary.