Cost drivers for managing dialysis facilities in a large chain in Taiwan

Abstract

Purpose

As the rise in expenditures will be even faster when the baby-boom generation soon reaches healthcare-dependent ages, healthcare providers are facing cost management decision of achieving superior performance. Taiwan provides a unique environment that the dialysis service providers face only one medical buyer. The purpose of this paper is to discuss cost factors of dialysis facilities.

Design/methodology/approach

This study provides a comprehensive analysis of factors influencing the dialysis costs using the data collected from a large renal clinic chain at Taiwan. The multiple linear regression analysis is employed to examine the factors influencing dialysis costs. The research sample composed of 1,255 patients is collected from 16 dialysis centers in Taiwan.

Findings

The results indicate that the treatment costs of dialysis are influenced by managerial factors including capacity utilization rate (CUR), the percentage of shares held by the owners and the geographical location of clinics (LC). The findings assist renal clinics to identify the parts critical to the cost control. Our results indicate that medical variable costs for performing the dialysis treatments are significantly influenced by such managerial factors as CUR, the percentage of owners’ shares holding and LC.

Practical implications

By identifying a comprehensive set of costs drivers for dialysis services, this study provides useful information for both health providers and policy makers. In specific, the result assists these providers to consider the utilization of better mechanisms/instruments to control costs by increasing the operational efficiency and achieving the economies of scale.

Originality/value

This paper contributes to exploring costs drivers that are generally absent from the extant literature. The result suggests that the regulators should be aware that the dialysis providers may reject costly patients. Hence, to establish the appropriate monitoring mechanisms to prevent such incidence is important. Finally, many other countries in addition to Taiwan also have a similar practice as national health insurances or services (e.g. Medicare in the USA or National Health Service in the UK). Those health systems may all face a similar cost control issues for handling end-stage renal disease patients. The analysis can help health systems worldwide to better design the reimbursement rates to account for the differences existed in dealing with the dialysis treatment costs.

Citation

Cho, C.-C., Chiu, A., Huang, S.Y. and Liu, S.-Z. (2018), "Cost drivers for managing dialysis facilities in a large chain in Taiwan", Management Decision, Vol. 56 No. 10, pp. 2225-2238. https://doi.org/10.1108/MD-06-2017-0550