Using multilevel models for assessing the variability of multinational resource use and cost data

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Abstract
Multinational economic evaluations often calculate a single measure of cost‐effectiveness using cost data pooled across several countries. To assess the validity of pooling international cost data the reasons for cost variation across countries need to be assessed. Previously, ordinary least‐squares (OLS) regression models have been used to identify factors associated with variability in resource use and total costs. However, multilevel models (MLMs), which accommodate the hierarchical structure of the data, may be more appropriate. This paper compares these different techniques using a multinational dataset comprising case‐mix, resource use and cost data on 1300 stroke admissions from 13 centres in 11 European countries. OLS and MLMs were used to estimate the effect of patient and centre‐level covariates on the total length of hospital stay (LOS) and total cost. MLMs with normal and gamma distributions for the data within centres were compared. The results from the OLS model showed that both patient and centre‐level covariates were associated with LOS and total cost. The estimates from the MLMs showed that none of the centre‐level characteristics were associated with LOS, and the level of spending on health was the centre‐level variable most highly associated with total cost. We conclude that using OLS models for assessing international variation can lead to incorrect inferences, and that MLMs are more appropriate for assessing why resource use and costs vary across centres. Copyright © 2004 John Wiley & Sons, Ltd.