Effects of cost allocation method change on patient profitability evaluation: A case of ability-to-bear principle

Background: The DPC (Diagnosis Procedure Combination) is a flat-sum reimbursement system, which was introduced in Japan; its charge of care decreases according to the hospitalization. Therefore, the need for cost management per DPC has been significantly increased. Thus, we address practical issues about how to allocate indirect cost to patients to understand the profitability of each patient for hospital management. Methods: We examined the data from 40 patients who underwent artificial knee joint replacement surgery between April and June 2015 at Hospital A (a private hospital with 410 beds). And we compared and verified two costing models, the frequency of practice treatment (FPT) model and the frequency of practice treatments and contribution margin ratio (FCM) model. Results: The correlation coefficient between the patient revenue and fixed indirect cost was 0.843 (p < 0.001) and 0.830 (p < 0.001) for the FPT model and FCM model. And the correlation coefficient value between patient revenue and patient costs (patient direct cost + patient indirect cost), which is 0.887 (p < 0.001) in the FPT model and 0.989 (p < 0.001) in the FCM model. Conclusions: Our findings demonstrate that the FCM model realized a fair cost burden to each patient; further, it was convincing for medical staff based on an interview with a senior staff member.