Hospital Costs by Cost Center of Inpatient Hospitalization for Medicare Patients Undergoing Major Abdominal Surgery

Published In: Journal of the American College of Surgeons, v. 220, no. 2, Feb. 2015, p. 207-217.e11

Posted on RAND.org on January 19, 2015

by Anne M. Stey, Robert H. Brook, Jack Needleman, Bruce L. Hall, David Zingmond, Elise H. Lawson, Clifford Y. Ko

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BACKGROUND: This study aims to describe the magnitude of hospital costs among patients undergoing elective colectomy, cholecystectomy, and pancreatectomy, determine whether these costs relate as expected to duration of care, patient case-mix severity and comorbidities, and whether risk-adjusted costs vary significantly by hospital. Correctly estimating the cost of production of surgical care may help decision makers design mechanisms to improve the efficiency of surgical care. STUDY DESIGN: Patient data from 202 hospitals in the ACS-NSQIP were linked to Medicare inpatient claims. Patient charges were mapped to cost center cost-to-charge ratios in the Medicare cost reports to estimate costs. The association of patient case-mix severity and comorbidities with cost was analyzed using mixed effects multivariate regression. Cost variation among hospitals was quantified by estimating risk-adjusted hospital cost ratios and 95% confidence intervals from the mixed effects multivariate regression. RESULTS: There were 21,923 patients from 202 hospitals who underwent an elective colectomy (n = 13,945), cholecystectomy (n = 5,569), or pancreatectomy (n = 2,409). Median cost was lowest for cholecystectomy ($15,651) and highest for pancreatectomy ($37,745). Room and board costs accounted for the largest proportion (49%) of costs and were correlated with length of stay, R = 0.89, p < 0.001. The patient case-mix severity and comorbidity variables most associated with cost were American Society of Anesthesiologists (ASA) class IV (estimate 1.72, 95% CI 1.57 to 1.87) and fully dependent functional status (estimate 1.63, 95% CI 1.53 to 1.74). After risk-adjustment, 66 hospitals had significantly lower costs than the average hospital and 57 hospitals had significantly higher costs. CONCLUSIONS: The hospital costs estimates appear to be consistent with clinical expectations of hospital resource use and differ significantly among 202 hospitals after risk-adjustment for preoperative patient characteristics and procedure type.

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