Using a Markov reward model to estimate spend-down costs for a geriatric department

A Markov model is used to describe movements of geriatric patients within a hospital system where the states of the Markov chain are acute/rehabilitative, long-stay care, discharge or death. By assigning costs to the states of this model, we can estimate the spend-down costs of running down services given that there are no more admissions and different costs are assigned to acute/rehabilitative and long-stay care. The model is used to estimate the spend-down costs using data previously validated for three Departments of Geriatric Medicine in the South West Thames Region of England. Our approach allows hospital planners to identify cost-effective strategies which take into account the fact that some geriatric patients remain in long-stay care for very long periods of time.