Resource utilization for observation-status stays at children's hospitals

Area of Science:

• Pediatric hospital medicine
• Healthcare economics
• Health services research

Background:

• Observation status is a hospital billing designation distinct from inpatient status.
• While presumed less resource-intensive, pediatric observation status utilization and costs are understudied.
• This study examines resource utilization for pediatric observation vs. inpatient stays.

Purpose of the Study:

• To describe resource utilization characteristics for pediatric patients in observation versus inpatient status.
• To compare costs associated with pediatric observation and inpatient stays nationally.

Main Methods:

• Retrospective cohort study of 2010 data from the Pediatric Health Information System.
• Analysis included observation and inpatient stays of ≤2 days for children admitted from the emergency department.
• Costs were compared using random-effect mixed models, adjusting for age, severity, and length of stay.

Main Results:

• Observation status was used for 33.3% of pediatric discharges, with significant hospital-level variation (2%-45%).
• Median costs for observation stays were $2559 (including room) or $678 (excluding room).
• Risk-adjusted observation stays were $260 cheaper than inpatient stays for asthma, gastroenteritis, bronchiolitis, and seizure, with substantial cost overlap.

Conclusions:

• Wide variability in observation status use and significant cost overlap challenge its utility as a distinct billing category.
• Potential lower reimbursement for observation status compared to inpatient status presents financial risks for hospitals with high volumes of these pediatric patients.