Estimation of health care costs and cost recovery: the case of Rafidya Hospital in Palestine.

Abstract

The purpose of this study is to develop an estimation model for health care costs and cost recovery, and evaluate service sustainability under an uncertain environment. The Palestinian National Authority's recent focus on improving financial accountability supports the need to research health care costs in the Palestinian territories. We examine data from Rafidya Hospital from 2005-2009 and use step-down allocation to distribute overhead costs. We use an ingredient approach to estimate the costs and revenues of health services, and logarithmic estimation to prospectively estimate the demand for 2011. Our results indicate that while cost recovery is generally insufficient for long-term sustainability, some services can recover their costs in the short run. Our results provide information useful for health care policy makers in setting multiple-goal policies related to health care financing in Palestine, and provide an important initiative in the estimation of health service costs.