A cost analysis of neonatal care in the UK: results from a multicentre study

Background A number of papers have recently been published examining the magnitude of scale economies in neonatal care and the level of activity at which these become attainable. Although these agree there is scope for economies in the production of neonatal care, they debate the extent to which such economies are attainable and how they might best be detected. A major multicentre study of neonatal units in the United Kingdom has produced costing and activity data allowing these issues to be explored afresh. Methods A postal questionnaire was used to determine neonatal cost and activity levels in 57 UK neonatal units. Costs for the financial year 1990‐1991 related to clinical staffing, support (such as pathology) and overheads (such as heat, light, power and administrative overheads). Activity related to the total number of care days provided and the number of these that were intensive in nature. All data were scrutinized to ensure consistent definitions. A multivariate regression analysis was used to investigate the relationship between costs and activity. Results A double-log function relating variations in total costs to total days, case-mix and an interaction term provided the best fit to the data. The analysis suggests that significant economies of scale are possible within the observed range of provision of intensive care. Conclusions Significant economies of scale may be attainable. Nevertheless, these results should be carefully interpreted. In particular, the costs of neonatal care should not be examined in isolation but in relation to outcomes. In certain instances, units of inefficient scale but acceptable outcome may be defensible on grounds of ease of access.