Katherine Mulloy

Economies of scale, physician volume for orthopedic surgical patients, and the DRG prospective payment system.

American hospitals face increasing constraints due to a variety of factors. Federal and state diagnostic-related group (DRG) prospective hospital pricing has caused tremendous fiscal pressure on hospitals; many face substantial financial deficits. We analyzed the volume of orthopedic surgical procedures performed by an individual orthopedic surgeon for all patients (N = 2,134) treated for a 3-year period at a large academic medical center; these surgeons were arbitrarily divided into low volume or high volume. Patients of low volume surgeons had a longer hospital length of stay and hospital cost (after correction for DRG case mix and severity of illness), greater financial risk under DRGs, and a poorer outcome, compared with patients of higher volume orthopedic surgeons. Pearson correlation showed an inverse relationship between cost per patient and physician volume for nonemergency patients -0.201 (P less than .0001), and emergency patients, -0.321 (P less than .0001). Although the reasons for these findings appeared multifactoral, they raise important issues related to orthopedic surgical hospital costs, access, and quality of care. In addition, they suggest that hospital cost for these patients (and perhaps outcome) may be related to orthopedic surgical volume, and that DRG hospital payment (on the margin) may affect future orthopedic surgical practice opportunities.

Neurology, age, hospital costs, and DRGs.

The DRG payment scheme is causing hospitals to examine the financial consequences of treating various patient populations. The purpose of this study was to examine resource utilization for hospitalized neurology patients treated during a 2-year period at an academic medical center. All patients (N = 1,993) were stratified by payor (Medicare, Medicaid, Blue Cross, and other) and age (0-35 years, 35-65 years, and 65 years and above). Mean hospital cost per patient (exclusive of MD fees) for each payor generally rose with age. Patients 35 years of age and over consumed a disproportionately larger share of resources than younger patients. DRG payment under an all payor system would have produced a substantial deficit for this group of patients. The mean hospital length of stay, number of diagnoses per patient, and mortality, as well as percent of admission through the emergency department generally rose with age. This study demonstrated that neurology patients 35 years of age and older generated higher resource utilization than their younger counterparts and were underpaid by the current DRG reimbursement. In this study, DRG payment appeared to provide significant financial disincentives to treat older neurology patients. If our findings are widespread, the quality of neurologic care and the elderlys access to it could become limited in the future.

Financial risk, hospital cost, and complications and comorbidities (CCs) in non-CC stratified neurosurgical diagnostic related groups (DRGs)

The purpose of this study was to analyze hospital resource consumption in the nine neurosurgical DRGs not stratified by complicating condition (CCs) (i.e., those neurosurgical DRGs that give no additional payment for associated medical conditions or complications occurring in the hospital). We analyzed 148 Medicare patients in these non-CC stratified neurosurgical DRGs and found that patients with a greater number of CCs had higher hospital resource consumption, substantial financial risk under DRGs, and a poorer outcome than patients with no CCs. These data suggest that the current DRG classification scheme may be inequitable vis-à-vis the non-CC stratified neurosurgical DRGs at our hospital. Hospitals that treat significant numbers of these patients may face disincentives to care for them under prospective Medicare DRG reimbursement.

DRGs, Orthopedic Surgery, and Age at an Academic Medical Center

The federal Medicare Diagnostic Related Group (DRG) hospital reimbursement system has been on line for 5 years. Hospitals contend that profit margins have dropped to dangerously low levels, due to the federal DRG Prospective Payment System. The authors analyzed all orthopedic surgical admissions to a large academic medical center under DRG reimbursement and characterized patients by age, resource utilization, and outcome. Total costs for the 1,040 orthopedic patients analyzed during a 15-month period added up to

Hospital Costs, Cancer Patients and Medical Diagnosis-Related Groups

9,718,800. Mean hospital cost per patient, mean hospital length of stay, percent outliers, and mortality generally increased with age. All age categories of patients 65 years of age and above generated financial losses under DRGs. Older orthopedic patients consumed a disproportionately larger share of resources than younger patients, and were more frequent users of the SICU and blood. The current DRG reimbursement scheme may be inequitable in relation to the older orthopedic surgery patient. If these findings are demonstrated at other medical centers, older orthopedic surgical patients could be limited in both their access and quality of care in the future.

Diagnosis related groups and the transfer of general surgical patients between hospitals.

This study analyzed hospital resource consumption for 5,065 Medicare patients in 90 noncancer designated medical diagnosis-related groups (DRGs) by whether or not patients had a diagnosis of a malignancy (i.e. cancer). Patients with cancer had greater hospital resource utilization than noncancer patients in these medical DRGs. Cancer patients had a greater percentage of outliers (p less than 0.02), twice the financial loss under DRGs, more diagnoses (p less than 0.001) and procedures (p less than 0.0001) per patient, and a greater mortality (p less than 0.0001) than noncancer patients. These findings raise the question of the equity of DRG payment vis-à-vis medical cancer patients in many medical DRGs, and whether the DRG scheme may provide disincentives to treat some elderly Americans with cancer.