Can high healthcare costs be reduced? Empirical evidence from community hospitals

OBJECTIVES- Rapidly rising health care costs continue to be significant concerns in the US hospital inpatient costs which comprise the largest proportion of health care expenditures. This study examines cost drivers in inpatient care costs from both patient side and provider side and cost savings attributed to preventable hospital admissions to reveal clinical care quality gap for ambulatory care-sensitive conditions. The results will inform policies on cost containment for providers and policy makers.

METHODS-Using a retrospective study design from a Louisiana statewide hospital discharge data, this study examined diabetes and heart disease defined as prevention quality indicators that are ambulatory care-sensitive conditions set up by the Agency for Healthcare Research and Quality. This study focused on patients residing in Jefferson and Orleans Parishes to reflect the local community in 2011. Ten major hospitals and sites were identified for cost saving calculation. High cost is defined as the top ten percentile cost in the data, over $14,682.50. The discharge number gap between community as prevention quality indicators and national benchmark from 2008 national inpatient sample given community census population (543,960) represents the number of preventable hospital admissions, which can further be converted to cost savings by multiplying community average charges per discharge and cost charge ratio (CCR). CCR measure was further obtained from the Healthcare Cost and Utilization Project data. Multivariate logistic regression and related analysis were conducted in STATA MP.

RESULTS- The study sample contained 1,612 diabetes discharges and 3,228 heart disease discharges with a total associated cost of $49.2 million in the community. Although there was no significant difference among age group, gender, and race, these risk factors were more likely to be associated with high costs (p<0.05): Medicare and other type insurance but not private insurance, compared to Medicaid; urology medicine and general surgery, longer patient length of stay. Total preventable hospital admission related cost savings in 2011 were $4.5 million for diabetes, $7.5 million heart disease, and a sum of $12 million.

CONCLUSIONS- Although there was not much room for cost reduction from patient side, local community can improve ambulatory care quality in diabetes and heart disease to save costs. Future endeavors could focus on specific areas to improve ambulatory care quality for cost containment, such as including care managers, disease registry, risk stratification, clinical decision support, and transition of care.