Time trends in inpatient physician spending

Area of Science:

• Health Economics
• Healthcare Management
• Medical Services Research

Background:

• Medicare expenditures for inpatient physician services have risen despite falling admissions and shorter lengths of stay.
• Understanding per-admission cost drivers is crucial for healthcare cost containment.

Purpose of the Study:

• To analyze the trend of increasing Medicare physician expenditures on a per-admission basis.
• To identify factors contributing to the rise in physician spending during inpatient stays.

Main Methods:

• Utilized 100% Medicare claims data from nine states (1985-1988).
• Examined "episodes of care" (pre- and post-inpatient stay) to account for services shifted outside the hospital.
• Analyzed trends at the Diagnosis-Related Group (DRG) level to control for case-mix and surgical use.
• Adjusted charges for inflation and geographic variation to estimate real spending growth.

Main Results:

• Physician spending per episode increased by 27% over four years.
• Significant variation observed by DRG, from 2% for transurethral prostatectomies to 56% for acute myocardial infarctions.
• Increased number of physicians involved in inpatient stays and greater use of diagnostic tests/procedures were key drivers.

Conclusions:

• Controlling the number of physicians involved in patient care is essential for managing inpatient expenditure increases.
• Technological utilization also plays a critical role in constraining the rise of physician inpatient spending.