Cost-Effectiveness and Cost Savings of a Hospital-Based Palliative Care Program

Key Points

  • The palliative care unit was not cost-effective on the basis of variable costs.
  • The palliative care unit was cost saving on the basis of comparison with usual care and contribution margin.

In an analysis reported in the Journal of Oncology Practice, Isenberg et al sought to determine the maximum possible costs for an inpatient palliative care unit to be considered cost-effective. Although the palliative care unit was not cost-effective on the basis of variable costs, it was cost saving compared with usual care and on the basis of revenue minus variable costs.

Study Details

The study used a hospital perspective to determine costs on the basis of claims from administrative data from the Johns Hopkins palliative care unit between March 2013 and March 2014.

The estimated number of quality-adjusted life years (QALYs) that could be generated by the palliative care unit was derived from the existing literature. A threshold analysis assessed the maximum costs for the palliative care unit to be considered cost-effective, incorporating willingness to pay at $180,000 per QALY. Costs considered in the analysis were variable costs alone, contribution margin (revenue minus variable costs), and palliative care unit cost savings compared with usual care, the costs of which were analyzed in a separate publication.

Cost-Effectiveness and Cost Savings

For the 153 patient encounters in the study: variable costs were $1,050,031, equivalent to $1,343 per patient encounter per day; the contribution margin (revenue minus variable costs) was $318,413, equivalent to a savings of $407 per encounter per day; and savings compared with usual care was $353,645, equivalent to $452 saved per encounter per day. It was estimated that the palliative care unit program could generate a total of 3.11 QALYs, comprising 0.05 QALYs from patient encounters and 3.06 QALYs from caregivers. According to threshold analysis, the maximum variable cost required for palliative care unit cost-effectiveness was $559,800 (3.11 QALYs at the threshold of $180,000 per QALY), equivalent to $716 per patient encounter per day; these values were well below the identified variable costs of $1,050,031 ($1,341 per encounter per day).

The investigators concluded: “According to variable costs, the [palliative care unit] was not cost effective; however, when considering savings of the [palliative care unit] compared with usual care, the [palliative care unit] was cost saving. The contribution margin showed that the [palliative care unit] was cost saving. This study supports efforts to expand [palliative care units], which enhance care for patients and their caregivers and can generate hospital savings. Future research should prospectively explore the cost utility of [palliative care units].”

The study was supported by the Canadian Institutes of Health Research, California Healthcare Foundation, National Cancer Institute, and Patient-Centered Outcomes Research Institute.

Sarina R. Isenberg, of Johns Hopkins Bloomberg School of Public Health, is the corresponding author of the Journal of Oncology Practice article.

The content in this post has not been reviewed by the American Society of Clinical Oncology, Inc. (ASCO®) and does not necessarily reflect the ideas and opinions of ASCO®.


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