Document Type



This report was a three phase effort - this is the third phase. Data produced from this study, allow for: 1) documentation and comparison of estimates of the relative cost of ambulatory care in several provider settings; 2) an estimation of the impact of National Health Insurance on the supply of and demand for ambulatory care in federally sponsored programs; and 3) Explanations for the variations in the costs of ambulatory care providers. The primary purpose of this third phase of the study is to explore the reasons for variations in the cost of ambulatory care providers in different settings. This study uses secondary data from a variety of sources. The authors developed a model for the empirical analysis of costs using the techniques of regression analysis with cost as the dependent variable. Independent variables for the model include: functional cost for medical encounter, quantity of output, case mix, intensity of service, price levels of inputs, and exogenous variables such as locations of centers and affiliations. The researchers sought to avoid the pitfalls inherent in defining the cost of all outputs of a health care facility. The unit cost figure is a weighted arithmetic mean cost, weighted by number of encounters by provider observation. The costs include total direct costs plus a share of overhead costs. X-ray costs, laboratory costs and drug costs are not included, even if directly connected to the encounter. Training, social services, and counseling costs are also excluded from the unit cost figure. Some of the sixteeen detailed findings of the study are listed as follows: 1) the functional cost per medical encounter is highest in the family health center programs, and lowest in the maternal and infant care programs; 2) physician productivity varies widely among programs; 3) lack of uniformity in the manner which each provider category reports case workloads and cost data; 4) costs vary widely by region and urban location; and 6) the annual average cost of health care services nationwide was $282.50 per person in 1974. There were not any conclusions or recommendations provided.

Publication Date



Indian Health Service, Staff Office of Planning, Evaluation and Research, Rockville, MD 20857 (E-10).