Budgetary inplications of cross boundary flows in East Anglia: a report to the Regional Health Authority

The East Anglian Regional Health Authority is concerned to base its budgetary decisions on accurate information about the costs of cross-boundary flows in the Region. A patient counts as a cross boundary flow when a resident in one district completes a spell as an in-patient in a hospital in another district. Patients can flow across regional boundaries as well as district boundaries within the same region. The first question at issue is whether such patients present distinctively different treatment problems from those presented by resident patients. Such treatment problems might register in terms of greater length of stay and/or greater severity of condition requiring more intensive treatment during the stay. Severity could have several aspects to it. At admission it could involve the expectation of greater difficulty in diagnosis or in treatment. During treatment, it could present in terms of the need for more medical and nursing time for some patients or for more complex or more frequent treatment. Severity would lead to greater caution about discharge and to greater length of stay. The second issue is whether such differences (if they exist) lead to higher cost. The third issue is whether such differences in cost justify budgetary compensation. To justify compensation in terms of budgetary targets the costs would have to be consistent and likely to continue over a long period of time. There could also be compensation in arrears which would be related to measured differences from plan. At present districts are compensated for cross boundary flows on the bases if overage costs per case by specialty. The East Anglian RHA has asked the Centre for Health Economics at York University to carry out an independent study of the whole issue. This request followed the Report of the Regional Working Party on Resource Allocation published in September 1983. We set out the two relevant paragraphs in Appendix 1 as they reflect the state of information and the questions in the minds of policy-makers when we began our enquiry. The terms of reference set to us by the RHA originally cover all types of hospital care. IN subsequent discussion it was agreed that the study should cover in-patients only and exclude out-patients, day cases and the costs of laboratory tests. The information required to make estimates on these points is not available routinely in sufficient detail for individual cases. The aim is: “To show whether there is a significant variation among Districts in the severity of illness of patients crossing boundaries for treatment and, if so, whether this results in a significant difference in attributable costs.”