Reference no: EM133329131

Case: What the cost is per unit health benefit (that is, decreased readmissions). In other words, is the cost of routine placental cultures worth the expense of resources? Currently, the hospital charge for performing placental culture is $36.00. This charge has resulted from an annual increase of 9%, so the average charge since 1999 is $30.55. Medicaid has paid between 70% (in 1994) and 47.6% (in 2003) of these charges. According to information from the hospital's chief financial officer, the Medicaid payment has averaged 60% for the study period. This figure indicates that the average payment from Medicaid has been $18.33 per culture. During the period from 1994 to 1998, the physicians in question did not perform routine placental cultures on all deliveries, and their patients experienced 25 readmissions in 1,070 deliveries, a rate of 23.36 readmissions per 1,000 deliveries. These readmissions resulted in total charges of $84,355.00, with an average charge of $3,374.20 (standard deviation of $1,862.74). Beginning in 1999, the physicians in question began the practice of performing placental cultures on all deliveries. During this period, their patients experienced 10 readmissions in 2,605 deliveries, a rate of 3.83 readmissions per 1,000 deliveries. These readmissions resulted in total charges of $26,825.00, with an average charge of $2,682.50 (standard deviation of $1,212.69). The 2,605 cultures cost $79,582.75. Assuming that 100% of the cultures are charged to Medicaid, this would result in a payment of $47,749.65. Total charges associated with readmissions and cultures during 1999-2003 were $74,574.65.

Question 1: What is the difference between the rate of readmission among the physicians in question from 1994 to 1998 and the readmission rate from 1999 to 2003?

Question 2: What is the marginal cost-effectiveness ratio to determine the cost per health benefit associated with the additional charge of the placental cultures?