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Regional Variation in Standardized Costs of Care at Children's Hospitals
Jennifer A Jonas1, Samir S Shah2, Isabella Zaniletti3
1The Children's Hospital of Philadelphia, Philadelphia, Pennsylvania, USA.
Insights
Pediatric hospital costs for common conditions like asthma, diabetic ketoacidosis (DKA), and acute gastroenteritis (AGE) show significant regional variation. Reducing this variation could save millions annually, highlighting opportunities for cost-effective care improvements.
Area of Science:
- Health Economics
- Pediatric Healthcare Management
- Healthcare Disparities
Background:
- Significant regional variations exist in healthcare costs for pediatric inpatient conditions.
- Understanding the drivers of these cost differences is crucial for optimizing resource allocation and patient care.
Purpose of the Study:
- To evaluate regional cost variations for pediatric asthma, diabetic ketoacidosis (DKA), and acute gastroenteritis (AGE).
- To identify factors contributing to these cost disparities.
- To estimate potential cost savings achievable by reducing identified variations.
Main Methods:
- A retrospective cohort study analyzed hospitalizations across 46 children's hospitals from October 2014 to September 2015.
- Trimmed standardized costs were assessed within and across geographic regions.
- Linear mixed-effects models were employed to adjust for patient- and encounter-level variables.
Main Results:
- Substantial cost variations persisted after adjusting for patient factors, with highest-cost regions showing 120% higher costs for asthma, 46% for DKA, and 150% for AGE compared to lowest-cost regions.
- Significant cost differences (P < 0.001) were observed between hospitals within the same region for all studied conditions.
- Encounter-level factors like length of stay and intensive care unit (ICU) utilization were identified as key drivers of cost variation.
- Estimated annual savings from reducing interregional and intraregional variation were $69.1 million and $25.2 million, respectively.
Conclusions:
- Pediatric inpatient costs exhibit considerable variation both between and within regions.
- Further research is needed to determine the extent of avoidable variation.
- Adjusting care models to eliminate unwarranted cost variations, without compromising patient outcomes, presents an opportunity for significant cost reduction.
Objective:
(1) To evaluate regional variation in costs of care for 3 inpatient pediatric conditions, (2) assess potential drivers of variation, and (3) estimate cost savings from reducing variation.
Design/Setting:
Retrospective cohort study of hospitalizations for asthma, diabetic ketoacidosis (DKA), and acute gastroenteritis (AGE) at 46 children
Measurements:
Variation in trimmed standardized costs were assessed within and across regions. Linear mixed effects models were adjusted for patient- and encounter-level variables to assess drivers of variation.
Results:
After adjusting for patient-level factors, variation remained. Using census division clusters, mean trimmed and adjusted total standardized costs were 120% higher for asthma ($1920 vs $4227), 46% higher for DKA ($7429 vs $10,881), and 150% higher for AGE ($3316 vs $8292) in the highest-cost compared with the lowest-cost region. Comparing hospitals in the same region, standardized costs were significantly different (P < 0.001) for each condition in each region. Drivers of variation were encounter-level variables including length of stay and intensive care unit utilization. For this cohort, annual savings from reducing variation would equal $69.1 million at the interregional level and $25.2 million at the intraregional level.
Conclusions:
Pediatric hospital costs vary between and within regions. Future studies should examine how much of this variation is avoidable. To the extent that less spending does not compromise outcomes, care models may be adjusted to eliminate unwarranted variation and reduce costs.