Objective: To examine the cost effects of a single dose (5 ml/kg) of a protein-free synthetic surfactant (Exosurf) as therapy for neonatal respiratory distress syndrome, for both rescue and prophylactic therapy.

Research Design: Nonblinded, randomized clinical trials of both rescue and prophylactic therapy. Regression analyses were used to control for the independent effects of sex, multiple birth, delivery method, birth weight, and surfactant therapy.

Setting: The prophylactic trial was conducted at a university medical center only; the rescue trial also included a tertiary community hospital.

Patients: Prophylaxis was administered immediately after birth to 36 infants (38 control subjects) with birth weights between 700 and 1350 gm. Rescue therapy was administered at 4 to 24 hours of age to 53 infants (51 control subjects) with established respiratory distress syndrome and birth weights > or = 650 gm (no upper limit). Infants in the prophylactic trial were not eligible for the rescue trial.

Results: For the rescue trial, there was a $16,600 reduction in average hospital costs (p = 0.18), which was larger than the cost of the surfactant ($450 to $900), yielding a probable net savings. For the prophylactic trial, hospital costs were larger for treated infants versus control subjects who weighed less than about 1100 gm at birth and lower for treated infants versus control subjects who weighed more than 1100 gm at birth (p 0.05). For the prophylactic sample, the result was an average cost per life saved of $71,500.

Conclusions: Single-dose rescue surfactant therapy is probably a cost-effective therapy because it produced a lower mortality rate for the same (and probably lower) expenditure. Single-dose prophylactic therapy for smaller infants ( or = 1350 gm) appeared to yield a reduction in mortality rate for a small additional cost. The use of multiple-dose therapy in infants who do not respond to initial therapy may alter the effects described above to either increase or decrease the observed cost-effectiveness of surfactant therapy. Regardless, surfactant therapy will remain a cost-effective method of reducing mortality rates, relative to other commonly used health care interventions.

Workers' compensation insurance provides cash benefits and health care for workers who are injured on the job. This DataWatch considers the costs and benefits of combining the health insurance component of workers' compensation with universal health insurance, creating a twenty- four-hour coverage plan. The paper documents a large potential savings from twenty-four-hour coverage: Workers' compensation medical charges are about twice as high as those for comparable off-work injuries. This disparity seems to result from price discrimination and lack of cost controls in workers' compensation. Twenty-four-hour coverage, however, may be difficult to implement.

Managed competition in health care is an idea that has evolved over two decades of research and refinement. It is defined as a purchasing strategy to obtain maximum value for consumers and employers, using rules for competition derived from microeconomic principles. A sponsor (either an employer, a governmental entity, or a purchasing cooperative), acting on behalf of a large group of subscribers, structures and adjusts the market to overcome attempts by insurers to avoid price competition. The sponsor establishes rules of equity, selects participating plans, manages the enrollment process, creates price-elastic demand, and manages risk selection. Managed competition is based on comprehensive care organizations that integrate financing and delivery. Prospects for its success are based on the success and potential of a number of high-quality, cost-effective, organized systems of care already in existence, especially prepaid group practices. As it is outlined here, managed competition as a means to reform the U.S. health care system is compatible with Americans' preferences for pluralism, individual choice and responsibility, and universal coverage.

Background: The California Diabetes and Pregnancy Program is a new preventive approach to improving pregnancy outcomes through intensive diabetes management preconception and early in pregnancy.

Methods: Hospital charges and length of stay data were collected on 102 program enrollees and 218 control cases. Ninety program enrollees and 90 control cases were matched on mother's age. White's classification, and race. Regression models controlled for these variables in addition to MediCal status, birth weight, and enrollment in the program.

Results: Hospital charges were about 30% less for program participants and days in the hospital were roughly 25% less. The program effects were larger for women that enrolled before 8 weeks gestation. More serious diabetics were also found to have larger reductions in charges and days.

Conclusion: After adjusting for inflation and differences in charges across hospitals, $5.19 is saved for every dollar spent on the program.

Many neonates are referred to neonatal intensive care units (NICUs) for specialized care far from their parents' residence. This distance can add to the stress of the parents and reduce the contact of the parents with their newborn. Small studies have found that back transporting these neonates to hospitals closer to their homes is safe and cost-effective. Despite these findings, the reluctance of many insurers to pay for back transports prevents or delays many back transports. Insurers may not consider the findings of the previous studies to be conclusive, given that the comparisons were between small numbers of neonates back transported and neonates who remained in tertiary care, and the potential for differences in severity of illness between the groups is significant. In this study the effect on hospital charges of back transports was examined by comparing the charges for care in community hospitals with what these charges would have been in a tertiary care center. The advantage of this method is that it avoids case-mix differences between the groups and thus minimizes the potential for small-sample bias. Data were collected for all back transports from a NICU to non-tertiary care centers (n = 90) for a 9-month period. We were able to obtain the itemized bills for the care at community hospitals for 42 of these patients. Each bill was recalculated using the charges for the NICU to determine potential for savings. The average charges for recovery care were about $6200 lower at the community hospital than they would have been at the NICU.