Home parenteral nutrition under an activity based funding model—An Australian costing study

Abstract

Aim

There is limited understanding about the cost of managing individuals requiring home parenteral nutrition within an outpatient setting. This study aimed to quantify healthcare costs of managing home parenteral nutrition (at‐home and within the multidisciplinary outpatient clinic setting) and compare incurred costs against an activity‐based funding model.

Methods

A 12‐month retrospective study compared parenteral nutrition at‐home costs and outpatient clinic costs to funding reimbursement. Costing data were retrieved from electronic medical records and monthly hospital finance reports for 28 individuals that required home parenteral nutrition at a quaternary hospital in Sydney, Australia. Hospital remuneration was calculated. Data are presented as median and range.

Results

Individuals on home parenteral nutrition attended a median (range) of 4 (3–7) multidisciplinary outpatient appointments over the year, where one outpatient appointment cost AU$294.51, less than the reimbursement of AU$366.37 based on the funding model allowing for medical billing; and AU$560.55 for activity‐based funding where additional loading was added for multidisciplinary input. The median at‐home costs per individual per month were AU$6949.86 (AU$2951.64 to AU$15015.77), compared to the funding model reimbursement of AU$7374.64 per individual per month.

Conclusions

The current healthcare funding model sufficiently covers home parenteral nutrition multidisciplinary outpatient service costs as well as at‐home costs within this single‐site study. This is likely due to the routine use of ready‐to‐hang 3‐in‐1 parenteral nutrition solutions. Further multicentre research is needed to better understand funding, corroborate the findings of this study, and inform future funding revisions.

1. INTRODUCTION

Intestinal failure refers to reduced gut functionality resulting in an inability to absorb macronutrients and/or electrolytes and water. ¹ Intestinal failure is the rarest organ failure, and the most common causes are intestinal dysmotility, excessive small bowel mucosal diseases, intestinal fistulae, short bowel syndrome and mechanical obstructions. ¹ Intestinal failure can be acute (Type I), prolonged acute (Type II), or chronic (Type III). ² Intravenous nutrition is required to meet the needs of this patient group to maintain health and/or growth. Therefore, Type III intestinal failure individuals usually require home parenteral nutrition (HPN) indefinitely to maintain health and/or growth. ¹ , ² , ³

Healthcare services for individuals requiring HPN across the world are extremely varied, even within developed countries. Several countries have coordinated centralisation of services, while others such as Australia continue to lack a comparable coordinated approach. ⁴ Likewise, funding models for HPN services also vary greatly from country to country.

In Australia, healthcare is underpinned by a universal health insurance scheme (Medicare) and hospitals are funded through an activity‐based funding model where the ‘currency’ for funding is known as the national weighted activity unit. ⁵ Outpatient care and services are funded through coding of clinical conditions using the non‐admitted patient diagnosis related groups ⁶ and non‐admitted patient self‐administered services at home classifications. ⁷ , ⁸ These classification systems determine the financial reimbursement that the service provider will receive, and activity is weighted based on the complexity of each clinical condition. This weighting is known as the national efficient price. ⁹ The national efficient price represents the proportion of the national weighted activity unit a service should receive. For example, in 2022–2023, the national efficient price for a dietitian clinic appointment was 0.0325, and the national weighted activity unit was set at $5797, which means the funding received by the hospital for the dietitian clinic would be $188.40 (0.024 × $5797). ⁶ , ⁹ In summary, hospitals are funded for the amount and complexity of healthcare provision using this predetermined clinical weighting system.

It is well documented that systems such as activity‐based funding are limited in that low volume, highly complex patients do not receive sufficient funding/reimbursement to cover the health providers' costs. ¹⁰ , ¹¹ These low volume, complex patient groups are also resource intensive, requiring input from multiple specialty services. This is also the case when managing individuals requiring HPN. ⁴ , ¹² , ¹³ It is for these reasons that individuals requiring HPN are often perceived as a high financial burden to the healthcare system. A recent Australian costing study reviewing inpatient expenses for individuals requiring HPN has found that both initial and re‐admission costs were significantly higher than reimbursement funding through an activity‐based funding model. ¹⁴

Individuals receiving HPN also require regular outpatient and at‐home management to minimise and prevent the complications associated with underlying disease and HPN. ³ Whilst prior HPN costing studies have been undertaken, the existing research is limited and has predominantly been conducted within American population groups and largely details inpatient costs. ¹³ , ¹⁵ Therefore, an HPN multidisciplinary outpatient cost analysis using an activity‐based funding health care funding model is imperative for providing evidence to inform service provision within countries where healthcare is embedded within an activity‐based funding model. The present study aimed to quantify the economic costs of multidisciplinary outpatient clinic activity and at‐home HPN services from a hospital perspective and compare these costs with reimbursement under an activity‐based funding model utilized in the Australian hospital setting.

2. METHODS

The present study was a 12‐month retrospective costing study (July 2022 to June 2023) calculating the economic cost of a multidisciplinary outpatient clinic service and parenteral nutrition at‐home costs for individuals requiring HPN managed under the care of the intestinal failure team at a quaternary hospital in Sydney, Australia. The hospital at which this study took place is a major gastrointestinal surgery centre, taking HPN referrals from across the state. The hospital also takes referrals for palliative oncology reasons, and this patient group makes up approximately 5% of individuals receiving HPN. Inclusion of palliative HPN patients reduces the median length of time on HPN data. At the time of this study, the HPN service utilised ready‐to‐hang three‐in‐one parenteral nutrition formulas containing vitamins and minerals as routine care, and only used individually compounded bags were deemed necessary. All parenteral nutrition solutions and ancillaries related to the parenteral nutrition management were paid for by the hospital. Ancillaries refer to consumables such as gloves, giving sets, and central line dressings.

For the study hospital, individuals discharged on HPN continued to be managed by the study hospital. Costs of HPN (parenteral nutrition and ancillaries) within the study hospital were all paid for by the study hospital, and the study hospital also collected the activity‐based funding reimbursement in the form of the national weighted activity unit.

Individuals receiving HPN within the study hospital (where ongoing HPN care was managed by the intestinal failure team within the hospital, and activity‐based funding is claimed by the hospital) were included in this costing study. All individuals that had commenced HPN greater than 3 months prior to the study were included. Individuals were excluded if they were only receiving intravenous fluids with no parenteral nutrition.

HPN costs were separated into two categories: (I) multidisciplinary outpatient clinic costs and (ii) costs for at‐home management (parenteral nutrition formula and ancillaries).

For multidisciplinary outpatient clinic costs, the total number of clinic appointments was collected through the hospital's electronic medical record. Clinic appointments were costed based on 2022–2023 state‐based employee awards for the current resourcing of a gastroenterologist (Level 2), ¹⁶ a clinical nurse consultant (Level 2) ¹⁷ and a specialist dietitian (Level 4). ¹⁸ All members of the multidisciplinary team saw the patient together, and an assumption of a 30‐min clinic appointment time with 30‐min non‐clinical time commitment per patient was made based on current practice. Clinic appointment time refers to direct patient contact, and non‐clinical time was allocated to undertake additional tasks including documentation in medical records, ordering supplies for patients, and multidisciplinary case conference discussions. An additional 30% for salary on‐costs was added to cover non‐productive costs such as superannuation and sick leave. Overhead costs such as the cost of office space, computers and computer programs, and electrical services were not included. Final multidisciplinary outpatient clinic costs are presented per clinic occasion of service.

For at‐home parenteral management costs, funding (non‐admitted patient self‐administered services at home) has historically been related to the cost of parenteral nutrition products including parenteral nutrition, micronutrients, additional electrolytes and all ancillaries related to HPN management at home, in which the health service has paid for. ⁷ No direct patient encounters or inpatient services should normally be included within this funding and therefore were not included when calculating at‐home parenteral management costs. ⁷ Based on this assumption, costs for at‐home management were calculated using monthly hospital financial reports for parenteral nutrition products (i.e. parenteral nutrition, micronutrients, additional electrolytes) and all ancillaries related to HPN management at home. Total costs were tallied for each individual's expenses per month. Final at‐home parenteral management costs are presented as median cost per individual per month.

The multidisciplinary HPN outpatient clinic reimbursement (non‐admitted patient‐diagnosis related group 20.25) had a 2022–2023 allocated base national efficient price of 0.0632 per occasion of service. Coding can be based on (i) a set national weighted activity unit per occasion of service (where the medical professional can bill Medicare for the patient's care received, which in turn offsets salaries and wages for the clinician) or (ii) via the use of a multidisciplinary loading (national weighted activity unit × 53%). ¹⁹ Funding at the study site at the time of the study utilized the national weighted activity unit with no multidisciplinary loading, but both costings are calculated in this study to provide a comparison between the two methods. All costs and salaries were based on 2022 prices and presented as the median reimbursement per clinic occasion of service.

For at‐home parenteral non‐admitted patient self‐administered services, at‐home reimbursement to the healthcare provider was a bundled monthly payment per individual. This funding was not provided if the individual was an inpatient for the duration of the month. For the financial period 2022–2023, the base NEP for HPN services was 1.2545. The final national weighted activity unit also took into consideration adjusters (e.g. residence outside a metropolitan location). Funding was calculated using the 2022–2023 at‐home activity data and are presented as the median reimbursement per person per month.

All reimbursement data were collected in the form of national weighted activity units using the hospital Targeted Activity and Reporting System, including multidisciplinary HPN outpatient clinic occasions of service (non‐admitted patient diagnosis‐related group) and reimbursement for at‐home (non‐admitted patient self‐administered services at home) funding. A national weighted activity unit of $5797 was used, in line with the 2022–2023 national efficiency price. ⁹ Due to the small sample size, results are presented as median and range; due to small numbers, no statistical analysis was undertaken. Data are presented as frequencies and descriptors. All costs are presented in Australian Dollars.

Ethical approval was granted by the Local Health District (RPA) Human Ethics Review Committee (Protocol No.: X22‐0150 & 2022/ETH00928). A waiver of consent was approved for this research to allow data for all individuals receiving HPN within the specified timeframe to be included in the study.

3. RESULTS

Participant characteristics are shown in Table 1. A total of 28 individuals were included in the analysis sample, with a median age of 45.5 years (27–61); most were female (68%) and had short bowel syndrome (46%). The median duration on HPN was 2 years (0.9–4.1). One individual was excluded as the cost of their at‐home HPN expenses was charged to another health district, and that health district claimed the activity‐based funding activity. Three individuals were on intravenous fluids alone and were not included within this study.

TABLE 1.

Characteristics of study participants (n = 28).

Descriptive characteristics	Median (range)
Median age in years	45.5 (27–61)
Age group
<30 years	9
30–39 years	4
40–49 years	2
50–59 years	6
60–69 years	6
70+ years	1
Sex
Female	19
Male	9
Pathophysiology
Short bowel	13
Intestinal fistula	3
Intestinal dysmotility	7
Mechanical obstruction	1
Extensive small‐bowel mucosal disease	4
Median duration on HPN, years	2 (0.9–4.1)

Abbreviations: HPN, home parenteral nutrition; IF, intestinal failure.

Table 2 shows the cost of resources for a multidisciplinary outpatient clinic appointment. Table 3 shows these costs per occasion of service compared to calculated non‐admitted patient diagnosis‐related group funding (with the option for medical billing) and non‐admitted patient diagnosis‐related group funding plus a 53% addition for multidisciplinary weighting. There were a median of 4 (IQR 3–7) outpatient appointments per person per year recorded. This equated to a median multidisciplinary outpatient clinic cost per person per year of $1178.05 compared to reimbursement of $1465.48 (for non‐admitted patient diagnosis related group allowing for medical billing) or $2243.20 (for non‐admitted patient diagnosis related group plus 53%) per individual per year.

TABLE 2.

Median cost per outpatient multidisciplinary clinic appointment.

Activity	Cost per OOS a
Senior dietitian (Level 4 Year 2)	$79.21
Clinical nurse consultant (Level 2 Year 2)	$85.62
Gastroenterologist staff specialist (Level 2)	$129.69
Total Cost	$294.51

Abbreviation: OOS, Occasion of Service.

^a One OOS inclusive of 30 min clinical time, 30 min non‐clinical time and 30% on costs. All costs are Australian dollars.

TABLE 3.

Comparison of total costs incurred for Outpatient Services per patient compared to Non‐Admitted Patient reimbursement options (n = 28).

Activity	Actual total cost a	Non‐admitted patient funding	Non‐admitted patient funding + MDT loading
Per OOS	$294.51	$366.37	$560.550

Abbreviations: MDT, Multidisciplinary Team; OOS, Occasion of Service. All costs are Australian dollars.

^a See Table 2 for calculations.

Median costs of parenteral nutrition and ancillaries per person per month are shown in Table 4. The median national efficient price for at‐home parenteral management was 1.2715 (1.2545–1.2715) per individual per month, equating to a median reimbursement of $7374.64 ($7370.89 to $7374.64) per individual per month within the activity‐based funding model. The range in national efficient price from 1.2454 to 1.2715 took into consideration the location of residence.

TABLE 4.

Comparison of costs incurred for Home Parenteral Nutrition per patient compared to at‐home reimbursement (n = 28).

Measure	Incurred HPN costs, median (range)	At‐home reimbursement
Per person per month
Parenteral nutrition costs	$5555.72 ($2180.32 to $13804.14)	NA
Ancillary costs	$915.67 ($396.49 to $2867.96)	NA
Total	$6949.86 ($2951.64 to $15015.77)	$7362.19

Abbreviation: HPN, home parenteral nutrition. All costs are Australian dollars.

4. DISCUSSION

The aim of the present study was to quantify the costs of multidisciplinary outpatient and parenteral nutrition at‐home costs for HPN in comparison to hospital remuneration using an activity‐based funding model. The study findings indicate that current reimbursement for HPN at‐home and clinic costs is adequate. These findings indicate that the funding model for HPN at‐home (non‐admitted patient self‐administered services at home) is sufficient to cover the costs of the parenteral nutrition and ancillaries, and also sufficient to allow for adequate funding of services to support individuals to stay at home. Further to this, outpatient clinic funding (non‐admitted patient diagnosis related group) is adequate to cover a multidisciplinary outpatient team.

The findings from this study are unexpected and not in line with previous research that has shown high costs and inadequate reimbursement when economically evaluating the inpatient setting. ¹³ , ¹⁴ However, this is one of the first studies to assess costs associated with HPN within the outpatient and home setting. While the median cost of HPN at home was in line with activity‐based funding, at‐home costs ranged from $2951 to $15,015 per month. The high use of ready‐to‐hang three‐in‐one parenteral nutrition formulas plays a large role in reducing costs, and likely explains these results. Emerging evidence supports the use of ready‐to‐hang three‐in‐one parenteral nutrition formulas as clinically safe to use, and they are also lower in price compared to individually compounded parenteral nutrition solutions. ²⁰ , ²¹

This study has highlighted the complexity of funding related to outpatient and at‐home HPN services. The original data that informed the development of the at‐home national efficient price were undertaken in 2015. ⁷ Given the changes in HPN solutions and ancillaries, these national efficient price data are likely outdated. Hence, further multicentre research is needed to further expand understanding of funding in this clinical area and to corroborate the findings of this study and inform future national efficient price targets. Furthermore, it is essential that HPN services have clear guidance on (i) resourcing requirements, including safe staff to patient ratios, (ii) financial management of individuals residing outside health district boundaries, (iii) outpatient billing processes, and (iv) regular auditing of clinical activity and reporting of activity to ensure activity is captured and correlates to the associated funding.

There are limitations to acknowledge within this study. This study has only taken into consideration costs from a direct hospital‐related healthcare perspective (i.e. costs related to staffing) and has not considered overhead costs. It has not taken into account funding associated with the medical professional billing Medicare for the patients' care received within the outpatient setting. Furthermore, this study has only calculated costs related to the HPN service. It is well recognised that this patient group requires input from many other health professionals including but not limited to surgical, pain management, stoma therapy and psychology. These services have not been costed within this study, and hence this study is not a reflection of the overall healthcare costs associated with HPN. Lastly, this study was reliant on assuming the accuracy of recording clinical activity which indicated a median of 4 multidisciplinary outpatient clinic appointments per patient per year.

This study is a single‐site study and may not be transferable to other sites, depending on funding and service models. The study site uses ready‐to‐hang three‐in‐one parenteral nutrition formulas. Sites that use a larger proportion of individually compounded bags may have significantly higher costs than what are reported here. Furthermore, the years 2022–2023 were still impacted by the COVID‐19 pandemic, with reduced outpatient activity. Despite these limitations, the findings from this study are of value in terms of providing a framework and a comparison for future studies.

Individuals requiring HPN have increased and complex needs, and resultantly have been shown to be a high‐cost patient group to the healthcare system. This study has highlighted that there is adequate funding to cover costs associated with outpatient and at‐home HPN services within a single centre. More research is required to determine whether this finding is generalizable to other HPN services within Australia and internationally.

AUTHOR CONTRIBUTIONS

SC and MC contributed to the conception and design of the research. SC, RC, DM and MC contributed to the acquisition, analysis, or interpretation of the data. SC and DM drafted the manuscript and all other authors critically revised the manuscript. SC agrees to be fully accountable for ensuring the integrity and accuracy of the work. All authors read and approved the final manuscript.

CONFLICT OF INTEREST STATEMENT

The authors declare no conflicts of interest.

FUNDING STATEMENT

There was no funding for this project.

ETHICS STATEMENT

Ethical approval was granted by the Sydney Local Health District Human Research Ethics Committee ‐ RPA Hospital, Protocol No.: X22‐0150 & 2022/ETH00928. A waiver of consent was approved for this research.

Carey S, Cao RHM, Moore D, Cunich M. Home parenteral nutrition under an activity based funding model—An Australian costing study. Nutrition & Dietetics. 2025;82(4):357‐362. doi: 10.1111/1747-0080.70010

DATA AVAILABILITY STATEMENT

The data that support the findings of this study are available on request from the corresponding author. The data are not publicly available due to privacy or ethical restrictions.