Abstract
Despite increasing public health expenditure in Thailand, many public hospitals continue to
face financial difficulties. This may reflect budget allocation and reimbursement mechanisms that do
not adequately account for hospitals' actual costs, or operational inefficiencies within hospitals. This
project aims to examine the costs and efficiency of hospitals under the Office of the Permanent
Secretary, Ministry of Public Health (OPS-MOPH), and university hospitals, to develop recommendations
for improving hospital cost estimation and budget allocation. The study draws on hospital cost data
from the Thai CaseMix Centre (TCMC), covering 38 OPS-MOPH hospitals and 3 university hospitals in
Bangkok Metropolitan Region in fiscal year 2022. Since the data were collected during the COVID-19
pandemic, the findings are subject to sample size limitations and may not fully reflect current hospital
operations. Community hospitals exhibited a higher proportion of labour costs, whereas regional and
university hospitals had substantially higher proportions of capital-related costs (material costs and asset
depreciation and amortization), reflecting the greater complexity of care and the use of advanced
medical technologies and high-cost pharmaceuticals.
Analysis of unit costs using data from the TCMC showed that, although university hospitals had
larger overall outpatient visits than regional hospitals, their outpatient cost per visit was approximately
2.6 times higher. In the three selected DRG case studies (appendectomy, diarrheaol disease, and
caesarean section) university hospitals were found to have higher cost per admission than regional
hospitals across all DRGs and major billing groups. These differences may reflect the use of high-cost
technologies and pharmaceuticals, and longer lengths of stay. In addition, efficiency analyses using cost
frontier and production frontier approaches for fiscal years 2023–2025, based on data from the Division
of Health Economics and Health Security, indicate that most OPS-MOPH hospitals were found to
operate close to the cost frontier. Nevertheless, many hospitals still have room to improve service
outputs, particularly in health promotion and disease prevention services. The study also finds that
hospital cost information systems remain underdeveloped. Most OPS-MOPH hospitals continue to rely
on simplified costing methods, which are practical but limited in capturing detailed resource use across
service types. Strengthening the system should therefore proceed gradually, beginning with a
standardized minimum dataset. The re-establishment of cost centres through dedicated costing teams
within individual hospitals, supported by regional coordinating teams responsible for the collection,
verification, and management of costing data at the point of service. Such arrangements would reduce
duplicate data entry and improve the reliability of costing information. Relevant agencies should also
introduce performance-based incentives, such as rewarding hospitals with efficiency above established
benchmarks. Hospitals performing below the benchmark should not face budget reductions; instead,
the causes of inefficiency and possible improvement strategies should be carefully assessed.
