Practical options for estimating cost of hospital inpatient stays

Analysts often estimate the cost of hospital services by applying cost/charge (c/c) ratios from federal or state data sources to the charges provided on hospital discharge records. Recently, a number of sources of discharge data are not permitting the release of hospital identities. This study compares several sources of c/c data for use in the restricted environment. Accounting data from four state systems and from files of the federal Centers for Medicare and Medicaid Services (formerly HCFA) are employed. In one analysis hospitals are grouped by selected characteristics. C/c varies by state and characteristics. Some HCFA and state measures track each other closely. A wider analysis of hospital-specific data for 51 states offers a separate test and extension of the initial results. The study supports a practical policy option of releasing grouped c/c ratios attached to discharge records when identity must be masked. Key words: hospital cost, cost to charge ratios, privacy protections.