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Exploring the HealthcarePrice Tag
Research on Private Hospitals.
Actuarial & Insurance Solutions
Ashleigh Theophanides
12 June 2008
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Overview of analysis
Private hospital building composition
Nurse staffing
Length of stay wards and theatres
Occupancy wards and theatres
Generalised Linear Modelling
Agenda
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Methodology Overview
Land and building
Surgicalward ICU Major theatre
Medical equipment
Overhead expenses
Staffingnursing and administrative
Working capital
Occupancy
Assets
Expenses
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Methodology Overview
Land and building
Surgical ICU Theatre
Medical equipment
Working capital
Assets
Ward
Theatre
Equipment U 3
U 2
U 1 Revenue
ROI
Target
Profit
M 3
M 2
M 1
Operating expenses
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Sample: 83% of private multi-disciplinary hospital beds
Distribution of hospitals by number of beds
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Distribution of beds and space per bed (m2)
0%
5%
10%
15%
20%
25%
30%
35%
0
5
10
15
20
25
30
35
40
45
Surgical
Medical
Paedia
tric
D
ay
ICU
Neonatal
HighCare
Matern
ity
Spaceperbed(m2)
Average hospital composition
Space per bed (m2) Percentage of beds
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Distribution of theatres
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2 76%
Females All ages 76%
Ages < 70 97%
Ages > 2 75%
Overall All ages 72%
Ages < 70 98%
Ages > 2 71%
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25 2008 Deloitte Touche TohmatsuHASA NHRPL 2009
Length of stay Theatres by day of week
Week day Average time Average age Distribution
Monday 61.2 41.6 18.2%
Tuesday 61.1 41.8 20.1%
Wednesday 61.0 41.5 19.4%
Thursday 59.8 41.0 20.1%
Friday 57.3 38.8 16.5%
Saturday 67.9 37.1 3.9%
Sunday 71.4 37.2 1.8%Total 60.7 40.8 100.0%
Major Theatre Minutes - 2006
Week day Average time Average age Distribution
Monday 61.3 42.1 18.2%
Tuesday 61.4 41.9 19.8%
Wednesday60.6 41.6 19.7%
Thursday 59.3 40.9 20.2%
Friday 56.6 39.0 16.5%
Saturday 67.5 37.3 3.7%
Sunday 70.7 37.1 1.9%
Total 60.4 40.9 100%
Major Theatre Minutes - 2007
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Distribution of cases by month of year
Length of stay Theatres by month of year
8.2%8.7%
9.2%
7.5%
9.1% 8.7% 8.8% 8.8%
7.8%
8.9% 8.8%
5.6%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
January
February
March
April
May
June
July
August
September
October
November
December
Avgtimeinm
ins
Distribution of cases in major theatre per month - 2006 vs 2007
2006 2007
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Length of stay Impact of RVUs
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
00.0-01.5
01.5-03.0
03.0-04.5
04.5-06.0
06.0-07.5
07.5-09.0
09.0-10.5
10.5-12.0
12.0-13.5
13.5-15.0
15.0-16.5
16.5-18.0
18.0-19.5
19.5-21.0
21.0-22.5
22.5-24.0
24.0-25.5
25.5-27.0
27.0-28.5
28.5-30.0
30.0-31.5
31.5-33.0
33.0+
NoRVU
Averagetheatretime(minutes)
Relative Value Units (RVU)
Averrage theatre time by RVU
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Length of stay Theatres by age
0
10
20
30
40
50
60
70
80
90
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 106
Averagetimeintheatre(minutes)
Age
Average theatre time by age
Major
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GLM is a form of regression, which takes account of the effect of several different
factors at once.
It assumes an underlying structure for the relationship between the variable weare trying to model (e.g. average claims experience) - the response ordependant variable- and the factors that affect it (e.g. age, gender, number ofchronic conditions etc).
Formula 1:Response variable = k x ffactor 1 x ffactor 2 x x ffactor n + e
Where k is a constant and ffactor n is a parameter which depends on the level offactor i (so if factor i is age, then ffactor i might be something like 0.8 if age < 35,1.00 if 35 age< 50 and 1.25 otherwise).
The factor e allows for statistical variability and is called the error term. In the
modelling, various statistical distributions are fitted to the error term with the aimof minimising such variability.
Generalised Linear Modelling - Introduction
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Generalised Linear Modelling Results All Wards
Estimate Lower CI (5%) Upper CI (95%)
2.013 2.003 2.023
Age band Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
A: Under 1 3.7% 1.836 1.825 1.846
B: 01-04 6.5% 0.823 0.818 0.828
C: 05-09 3.5% 0.745 0.740 0.751
D: 10-14 2.5% 0.834 0.827 0.842
E: 15-19 4.1% 0.831 0.826 0.837
F: 20-24 5.5% 0.887 0.881 0.892
G: 25-29 7.8% 0.950 0.945 0.955H: 30-34 9.7% 1.000 1.000 1.000
I: 35-39 9.0% 1.043 1.038 1.048
J: 40-44 7.6% 1.066 1.061 1.072
K: 45-49 7.2% 1.061 1.055 1.066
L: 50-54 6.5% 1.040 1.034 1.046
M: 55-59 6.1% 1.022 1.016 1.028
N: 60-64 5.3% 1.031 1.025 1.037
O: 65-69 4.6% 1.057 1.051 1.063
P: 70-74 3.8% 1.112 1.105 1.118
Q: 75-79 3.0% 1.174 1.167 1.182
R: 80-84 1.9% 1.230 1.221 1.239
S: 85+ 1.3% 1.362 1.350 1.373
1.029 1.024 1.035
Intercept
Age Results
Exposure weighted factor
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Generalised Linear Modelling Results All Wards
No of Proceduires Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimateA: 0 32.5% 1.340 1.336 1.344
B: 1 33.6% 1.000 1.000 1.000
C: 2 17.5% 1.042 1.039 1.046
D: 3 7.9% 1.199 1.194 1.204
E: 4 4.0% 1.381 1.373 1.388
F: 5 2.0% 1.592 1.582 1.602
G: 6 1.0% 1.845 1.831 1.860
H: 7 0.6% 2.088 2.069 2.108
J: 8 0.3% 2.448 2.420 2.476
K: 9 0.2% 2.351 2.321 2.382
L: 10 0.1% 3.124 3.073 3.177
M: 10+ 0.2% 4.582 4.542 4.623
1.193 1.190 1.197
No of ICD10 Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
A: 0 0.1% 0.602 0.567 0.638
B: 1 50.1% 1.000 1.000 1.000
C: 2 26.7% 1.305 1.301 1.308
D: 3 12.5% 1.626 1.621 1.631
E: 4 5.5% 1.932 1.925 1.940F: 5 2.5% 2.319 2.307 2.331
G: 6 1.2% 2.663 2.646 2.681
H: 7 0.6% 3.095 3.069 3.121
J: 8 0.3% 3.543 3.507 3.580
K: 9 0.2% 3.924 3.874 3.974
L: 10 0.1% 3.543 3.488 3.599
M: 10+ 0.2% 5.258 5.205 5.311
1.300 1.297 1.303
Procedures Results
Exposure weighted factor
ICD10 Results
Exposure weighted factor
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Generalised Linear Modelling Results All Wards
Weekday Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
Monday 19.0% 1.000 1.000 1.000
Tuesday 18.6% 0.954 0.951 0.957
Wednesday 17.7% 0.943 0.940 0.947
Thursday 17.8% 0.933 0.930 0.937
Friday 15.1% 0.967 0.963 0.970
Saturday 6.3% 1.091 1.086 1.095
Sunday 5.5% 1.123 1.118 1.128
0.977 0.974 0.980
Year Patient distribution Risk factorestimate
Risk factorLower CI estimate
Risk factorUpper CI estimate
2006 49.2% 1.023 1.021 1.025
2007 50.8% 1.000 1.000 1.000
1.011 1.010 1.012
Gender Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
Female 56.5% 1.000 1.000 1.000
Male 43.5% 1.011 1.009 1.013
1.005 1.004 1.006
Maternity indicators Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
No 93.7% 1.000 1.000 1.000
Yes 6.3% 1.085 1.079 1.090
1.005 1.005 1.006
Exposure weighted factorMaternity Results
Exposure weighted factor
Weekday Results
Exposure weighted factor
Exposure weighted factor
Gender results
Year results
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Generalised Linear Modelling Results All Wards
Ward Factors
Exposure we g te
factor
No of ICD10 1.300
No of Proceduires 1.193
Age band1.029
Year 1.011
Maternity indicators 1.005
Gender 1.005
Weekday 0.977
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Generalised Linear Modelling Results Theatres
Estimate Lower CI (5%) Upper CI (95%)
27.296 27.168 27.425
Age band Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
A: Under 1 1.0% 0.938 0.929 0.948
B: 01-04 4.9% 0.882 0.877 0.887
C: 05-09 3.6% 0.925 0.920 0.931
D: 10-14 2.6% 0.982 0.976 0.988
E: 15-19 4.4% 0.970 0.965 0.975
F: 20-24 5.8% 0.971 0.967 0.976
G: 25-29 8.2% 0.988 0.984 0.992H: 30-34 10.4% 1.000 1.000 1.000
I: 35-39 9.9% 1.007 1.003 1.011
J: 40-44 8.3% 1.009 1.005 1.013
K: 45-49 7.7% 1.018 1.014 1.022
L: 50-54 7.0% 1.021 1.017 1.025
M: 55-59 6.6% 1.028 1.024 1.032
N: 60-64 5.8% 1.022 1.017 1.026
O: 65-69 4.9% 1.007 1.002 1.011
P: 70-74 3.8% 0.983 0.978 0.988
Q: 75-79 2.8% 0.950 0.945 0.956
R: 80-84 1.6% 0.911 0.904 0.917S: 85+ 0.8% 0.899 0.890 0.907
0.990 0.986 0.994
Intercept
Age Results
Exposure weighted factor
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Generalised Linear Modelling Results Theatres
No of Procedures Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
A: 0 7.1% 0.427 0.414 0.439
B: 1 45.0% 1.000 1.000 1.000
C: 2 25.7% 1.149 1.146 1.151
D: 3 11.1% 1.288 1.284 1.291
E: 4 5.3% 1.408 1.403 1.413
F: 5 2.6% 1.530 1.523 1.537
G: 6 1.3% 1.697 1.687 1.707
H: 7 0.7% 1.837 1.824 1.850
J: 8 0.4% 1.935 1.917 1.953
K: 9 0.2% 2.070 2.047 2.093
L: 10 0.2% 1.953 1.929 1.977M: 10+ 0.3% 2.636 2.615 2.658
1.093 1.091 1.096
No of ICD10 Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
A: 0 0.1% 1.026 0.988 1.067
B: 1 54.9% 1.000 1.000 1.000
C: 2 25.0% 1.059 1.056 1.061
D: 3 11.4% 1.085 1.082 1.088
E: 4 4.6% 1.138 1.133 1.142
F: 5 2.0% 1.187 1.181 1.193G: 6 0.9% 1.206 1.198 1.215
H: 7 0.5% 1.261 1.249 1.273
J: 8 0.3% 1.304 1.288 1.320
K: 9 0.2% 1.320 1.300 1.340
L: 10 0.1% 1.189 1.170 1.207
M: 10+ 0.2% 1.406 1.389 1.422
1.040 1.038 1.041
ICD10 Results
Procedures Results
Exposure weighted factor
Exposure weighted factor
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Generalised Linear Modelling Results Theatres
Weekday Patient distribution Risk factorestimate
Risk factorLower CI estimate
Risk factorUpper CI estimate
Monday 19.0% 1.010 1.008 1.013
Tuesday 20.0% 1.000 1.000 1.000
Wednesday 19.3% 1.007 1.005 1.010
Thursday 19.4% 0.995 0.992 0.997
Friday 16.1% 0.988 0.985 0.991
Saturday 3.7% 1.072 1.067 1.077
Sunday 2.6% 1.113 1.107 1.118
1.006 1.004 1.008
Year Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
2006 49.5% 1.007 1.005 1.008
2007 50.5% 1.000 1.000 1.000
1.003 1.002 1.004
Gender Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
Female 57.2% 1.000 1.000 1.000
Male 42.8% 1.052 1.050 1.054
1.022 1.021 1.023
Maternity indicators Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate
No 93.0% 1.000 1.000 1.000
Yes 7.0% 0.629 0.626 0.633
0.974 0.974 0.974
Exposure weighted factor
Exposure weighted factor
Exposure weighted factor
Weekday Results
Maternity Results
Year results
Gender results
Exposure weighted factor
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Generalised Linear Modelling Results Theatres
RVU band Patient distribution
Risk factor
estimate
Risk factor
Lower CI estimate
Risk factor
Upper CI estimate0 3.2% 1.657 1.647 1.666
000 - 001.5 0.6% 1.677 1.660 1.695
001.5 - 003 5.9% 1.007 1.001 1.013
003 - 004.5 4.6% 1.021 1.014 1.027
004.5 - 006 4.9% 1.195 1.188 1.202
006 - 007.5 4.9% 1.147 1.140 1.153
007.5 - 009 13.4% 1.000 1.000 1.000
009 - 010.5 5.5% 1.188 1.181 1.194
010.5 - 012 3.9% 1.493 1.484 1.501
012 - 013.5 3.7% 1.574 1.565 1.583
013.5 - 015 3.4% 1.459 1.451 1.468
015 - 016.5 3.9% 1.477 1.469 1.485
016.5 - 018 4.8% 1.868 1.859 1.877
018 - 019.5 5.2% 1.766 1.758 1.775
019.5 - 021 1.9% 2.371 2.357 2.385
021 - 022.5 2.9% 2.145 2.133 2.157
022.5 - 024 1.3% 2.342 2.325 2.358
024 - 025.5 8.0% 2.639 2.626 2.653
025.5 - 027 0.8% 2.708 2.686 2.729
027 - 028.5 1.2% 3.024 3.004 3.044
028.5 - 030 1.2% 3.061 3.041 3.081030 - 031.5 0.7% 3.182 3.158 3.207
031.5 - 032 0.6% 3.367 3.340 3.395
033+ 4.6% 4.052 4.035 4.069
BLANK_CPT 6.8% 4.562 4.431 4.697
NO MATCH 1.8% 1.682 1.669 1.694
1.907 1.890 1.924Exposure weighted factor
RVU band Results
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Summary of GLM factors
Theatre Factors
Exposure weighted
factor
RVU band 1.907
No of Procedures 1.093
No of ICD10 1.040
Gender 1.022
Weekday 1.006Year 1.003
Age band 0.990
Maternity indicators 0.974
Ward Factors
Exposure weighted
factorNo of ICD10 1.300
No of Proceduires 1.193
Age band 1.029
Year 1.011
Maternity indicators 1.005
Gender 1.005Weekday 0.977
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Ward and Theatre GLM factors by Age
0.000
0.200
0.400
0.600
0.800
1.000
1.200
1.400
1.600
1.800
2.000
A:U
nder1
B:01-04
C
:05-09
D
:10-14
E:15-19
F:20-24
G
:25-29
H
:30-34
I:35-39
J
:40-44
K:45-49
L
:50-54
M:55-59
N
:60-64
O
:65-69
P:70-74
Q
:75-79
R
:80-84
S:85+
Riskfac
torestimate
Risk factor estimates by age
Theatre Ward
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Ward and Theatre GLM factors by Weekday
0.000
0.200
0.400
0.600
0.800
1.000
1.200
Mo
nday
Tue
sday
Wednesday
Thursday
F
riday
Saturday
Su
nday
Risk factor estimates by day of week
Theatre Ward
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Theatre GLM factors by RVU
0.000
0.500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
0
000-001.5
001.5-
003
003-004.
5
004.5-
006
006-007.5
007.5-
009
009-010.5
010.5-
012
012-013.
5
013.5-
015
015-016.5
016.5-
018
018-019.
5
019.5-
021
021-022.5
022.5-
024
024-025.5
025.5-
027
027-028.
5
028.5-
030
030-031.5
031.5-
033
033+
Riskfactorsestimate
RVU band
GLM factors by RVU
Consolidated
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Increase in occupancy from 62.09% to 64.52% between 2006 and 2007
Reason for the increase in occupancy?
Analysis of change in Occupancy
Utilisation Length of stay
1.91% 0.52%
Driven by changes in disease
profiles among those with 2 or
more ICD10s
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