Business case for eliminating health disparities: A "cost of disparity" methodology for state health departments

Background: Health disparities are one impact of “borders” on health. It is important to make the business case that investment in the elimination of disparities can be cost saving. We have estimated the potential admissions cost savings that could result from eliminating disparities in asthma outpatient “treatment success”.

Methods: We used Black/White adult current asthma prevalence and Black/White asthma hospital admission rates to determine Black excess asthma hospital admissions not explained by excess asthma prevalence. This excess results from a difference in “treatment success”. We determined the fraction of Black asthma admissions likely to be due to disparity in treatment success. We identified Black Medicaid admissions due to asthma in 2004 (primary diagnosis asthma or primary diagnosis respiratory failure plus any secondary diagnosis asthma). We estimated the percent of these asthma admissions and their costs that were due to disparity in treatment success.

Results: The Black/White ratio of asthma prevalence was 1.2. The Black/White ratio of asthma hospitalization rates was 2.6. About 53.8% of Black asthma hospitalizations were attributable to difference in asthma treatment success. There were 564 Medicaid admissions for Blacks with asthma, at a cost of $3,744,574. The 53.8% due to the disparity in asthma treatment success is estimated to have been 298 admissions and $2,014,581.

Conclusion: About $2,000,000 of savings to Maryland Medicaid is possible if the outpatient asthma treatment success disparity were eliminated. This simple method can be extended (other diseases, other insurers, and other healthcare utilization) to define the potential return on investment from efforts to reduce health disparities.