Jan 1, 1998
A Bundle of Savings
Advances in neonatal technology over the past two decades have significantly improved the survival chances of very low birthweight infants (infants weighing 1,500 grams or less)—but at a high cost. These infants frequently require long and expensive episodes of intensive care, and their mortality rates remain high. Furthermore, because most are born to lower-income mothers, the cost of their care falls disproportionately to government programs.
From a policy standpoint, therefore, it is desirable to prevent very low birthweight births. To understand the cost-effectiveness of interventions designed to prevent these births, policymakers need precise information about how much it costs to treat very low birthweight infants. Yet there is virtually no quantitative cost information on these infants; they are a difficult patient population to study. For one thing, very low birthweight births are rare events: Although they account for over 40 percent of infant mortality in the United States, they account for only 1 percent of annual births. In addition, very low birthweight infants are often transferred during their initial hospitalization, which complicates the task of tracking their treatment costs.
To fill this knowledge gap, RAND researcher Jeannette Rogowski conducted the most comprehensive study to date on the cost of treating very low birthweight infants during their first year of life. She examined how that cost varied for different episodes of care (initial hospitalization, rehospitalization, and outpatient care) and across different outcomes. The study was based on a unique data set that comprises all single live births under 1,500 grams in the state of California during 1986 and 1987 to mothers who were continuously eligible for Medicaid through traditional channels. The data set provides detailed information on the use of medical services and treatment costs during the entire first year of life for a very large number of very low birthweight infants.
The study found that the average aggregate cost of caring for a very low birthweight infant over its first year of life was $59,730. As shown in Figure 1, this cost varied widely, depending on whether and how long the infant survived. The costliest treatment was incurred by infants who survived their initial hospitalization but died before their first birthday: Those infants cost an average of $112,120 to treat. Infants who survived to age one cost an average of $76,850. The cost difference between these two groups was largely driven by the cost of rehospitalization, which is a reflection of inpatient days (28.2 for nonsurvivors versus 7.4 for survivors).
Among the infants who died during their initial hospitalization, 69 percent did so within one day of birth. These infants were the least expensive to treat: Their care cost an average of $6,310. For infants who died during the remainder of their initial hospitalization, average treatment cost was $58,800.
As expected, the costliest episode of care was the initial hospitalization, which averaged $53,570. Again, the costliest infants in this category—$75,750 per episode—were those who survived their initial hospitalization episode but died later during the first year. Survivors to age one cost nearly as much: $68,860.
Subsequent episodes of care were less expensive for all the infant groups. On average, rehospitalization cost $5,290 per infant. Once more, infants who did not survive until age one were the costliest to treat in rehospitalizations: $35,680 on average. By contrast, infants who did survive the first year of life cost an average of $6,650 to treat.
A measure of the cost-effectiveness of treating very low birthweight infants is the cost of producing a survivor. It is derived by dividing total spending on medical care for all these infants by the number of survivors. As shown in Figure 2, the cost-effectiveness of treatment varied substantially by the infant's birthweight. The cost of producing a survivor in the lowest birthweight category (under 750 grams)—$273,900—is so high because of the intensity of care required by these infants, combined with their low survival rate (only 18 percent). Costs fell sharply for the next birthweight category—$138,800 for infants weighing between 750 and 999 grams—and continued to drop for infants at successively higher birthweights.
Public policies aimed at improving birth outcomes can be extremely cost-effective. Maternal interventions such as prenatal care are relatively inexpensive; each normal birth that occurs instead of a very low birthweight birth saves $59,700 in the first year of care. Furthermore, interventions that simply shift very low birthweight infants into higher weight categories can save substantial amounts. An increase of 250 grams saves an average of $12,000—$16,000 in the first year. An increase of 500 grams generates savings of $28,000.
However, not all increases in birthweight produce cost savings. At the lowest birthweights, added weight can increase treatment costs because the infant is likely to live longer and require a lengthier hospitalization. Thus, an increase in birthweight from less than 750 grams to between 750 and 999 grams would actually increase treatment cost by $29,300; an increase to the 1,000—1,249-gram range would increase costs by $13,500. Nevertheless, these increased expenditures would also produce more survivors and have the effect of moving infants into birthweight ranges for which medical care is more cost-effective, with fewer treatment resources expended per survivor. Thus, measures that prevent very low birthweight births could have the salutary effect of substantially reducing both medical costs and infant mortality.