Economic Aspects of Evaluation - Evaluation Methods in Biomedical Informatics - page 309

panies calculate costs. In addition, there are differences between certain
definitions traditionally used by accountants from those used by health care
economists. In this section, the differences between costs and charges are
discussed, the various types of costs included in economic analyses in health
care defined, and a general overview of the types of cost accounting systems
typically used in hospitals provided. Finally, more generalized national or
regional measures of costs that can be used in economic analyses are
described.
How Costs Do Not Equal Charges
One of the most important realizations over the past few decades
with respect to health care costs is that there is little relationship be-
tween charges (the price that a hospital or provider asks the insurer
or patient for payment) and the actual costs of that particular item or
service to the provider. 9 There are many reasons for this, from the market
strength of many insurance companies that negotiate lower charges
from providers to desires on the part of certain institutions to magnify the
appearance of donated free care by having high prices for self-pay
patients.
Direct Costs
Direct costs are those costs that are an immediate consequence of the
choice or decision being made. They typically include the costs of medical
services (hospitalizations, medications, physician and other health care pro-
fessional fees, durable medical equipment, etc).
Time Costs
The amount of time required by patients to participate in a treatment
should be included as a real cost to any program. If two health programs
are equally effective and have equal monetary costs, the program that
required less patient time would be preferred. Details for measuring and
evaluating different types of time expended in health care activities can be
found in Gold et al. 3 The fundamental concept is that time is a valuable
commodity that should be included in the overall costs of a particular inter-
vention. It is often true, however, that when considering clinical informa-
tion system interventions, patient time considerations are ignored, often
because the patient is in the hospital the entire time under either program,
and the time-costs would likely cancel out. On the other hand, if a particu-
lar information system intervention had the effect of decreasing length-of-
stay, the differential times of the patients could be included in the analysis
(and should be, if the analysis is being conducted from the societal point of
view).