Techniques for estimating health care costs with censored data: an overview for the health services researcher

Harindra C Wijeysundera,^1–5 Xuesong Wang,⁵ George Tomlinson,^2,4 Dennis T Ko,^1,3–5 Murray D Krahn,^2–4,6
1Division of Cardiology, Schulich Heart Centre and Department of Medicine, Sunnybrook Health Sciences Centre, University of Toronto, ²Toronto Health Economics and Technology Assessment (THETA) Collaborative, University of Toronto, ³Department of Medicine, University of Toronto, ⁴Institute of Health Policy, Management and Evaluation, University of Toronto, ⁵Institute for Clinical Evaluative Sciences, ⁶Leslie Dan Faculty of Pharmacy, University of Toronto, Toronto, Ontario, Canada

Objective: The aim of this study was to review statistical techniques for estimating the mean population cost using health care cost data that, because of the inability to achieve complete follow-up until death, are right censored. The target audience is health service researchers without an advanced statistical background.
Methods: Data were sourced from longitudinal heart failure costs from Ontario, Canada, and administrative databases were used for estimating costs. The dataset consisted of 43,888 patients, with follow-up periods ranging from 1 to 1538 days (mean 576 days). The study was designed so that mean health care costs over 1080 days of follow-up were calculated using naïve estimators such as full-sample and uncensored case estimators. Reweighted estimators – specifically, the inverse probability weighted estimator – were calculated, as was phase-based costing. Costs were adjusted to 2008 Canadian dollars using the Bank of Canada consumer price index (http://www.bankofcanada.ca/en/cpi.html).
Results: Over the restricted follow-up of 1080 days, 32% of patients were censored. The full-sample estimator was found to underestimate mean cost ($30,420) compared with the reweighted estimators ($36,490). The phase-based costing estimate of $37,237 was similar to that of the simple reweighted estimator.
Conclusion: The authors recommend against the use of full-sample or uncensored case estimators when censored data are present. In the presence of heavy censoring, phase-based costing is an attractive alternative approach.

Keywords: health care costing, heart failure, incomplete data, statistical techniques, phase-based costing