The concept of “cost” seems easy enough. Few things in healthcare are ever simple, and cost is one of those. In a hospital setting, there are at least three different ways to define “cost”:
- For the hospital, it is the cost of providing the service. This usually includes operational cost as well as allocated overhead and capital costs.
- For a payer, it often is the amount of the reimbursement or the payment to the hospital.
- For a patient, “cost” might be the hospital’s billed charge amount after any discounts.
In The Princess Bride Inigo Montoya says, “You keep saying that word. I do not think it means what you think it means.”
Each version of “cost” will produce different amounts for any given service. If a research paper or publication does not define “cost” or how it is calculated be wary. What you think the metric means might not be what you think.