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Spending more, doing more, or both? An alternative method for quantifying utilization during hospitalizations

Authors

  • Tara Lagu MD, MPH,

    Corresponding author
    1. Division of General Internal Medicine, Baystate Medical Center, Springfield, Massachusetts
    2. Department of Medicine, Tufts University School of Medicine, Boston, Massachusetts
    • Center for Quality of Care Research, Baystate Medical Center, Springfield, Massachusetts
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  • Harlan M. Krumholz MD, SM,

    1. Center for Outcomes Research and Evaluation, Yale–New Haven Hospital, New Haven, Connecticut
    2. Section of Cardiovascular Medicine, Department of Internal Medicine, Yale University School of Medicine, New Haven, Connecticut
    3. The Robert Wood Johnson Clinical Scholars Program, Yale University School of Medicine, New Haven, Connecticut
    4. Section of Health Policy and Administration, Yale University School of Public Health, New Haven, Connecticut
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  • Kumar Dharmarajan MD, MBA,

    1. Center for Outcomes Research and Evaluation, Yale–New Haven Hospital, New Haven, Connecticut
    2. Division of Cardiology, Columbia University Medical Center, New York, New York
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  • Chohreh Partovian MD, PhD,

    1. Center for Outcomes Research and Evaluation, Yale–New Haven Hospital, New Haven, Connecticut
    2. Section of Cardiovascular Medicine, Department of Internal Medicine, Yale University School of Medicine, New Haven, Connecticut
    3. The Robert Wood Johnson Clinical Scholars Program, Yale University School of Medicine, New Haven, Connecticut
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  • Nancy Kim MD, PhD,

    1. Center for Outcomes Research and Evaluation, Yale–New Haven Hospital, New Haven, Connecticut
    2. Section of General Internal Medicine, Department of Internal Medicine, Yale University School of Medicine, New Haven, Connecticut
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  • Purav S. Mody MD,

    1. Department of Internal Medicine, University of Texas Southwestern Medical Center, Dallas, Texas
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  • Shu-Xia Li PhD,

    1. Center for Outcomes Research and Evaluation, Yale–New Haven Hospital, New Haven, Connecticut
    2. Section of Cardiovascular Medicine, Department of Internal Medicine, Yale University School of Medicine, New Haven, Connecticut
    3. The Robert Wood Johnson Clinical Scholars Program, Yale University School of Medicine, New Haven, Connecticut
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  • Kelly M. Strait MS,

    1. Center for Outcomes Research and Evaluation, Yale–New Haven Hospital, New Haven, Connecticut
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  • Peter K. Lindenauer MD, MSc

    1. Center for Quality of Care Research, Baystate Medical Center, Springfield, Massachusetts
    2. Division of General Internal Medicine, Baystate Medical Center, Springfield, Massachusetts
    3. Department of Medicine, Tufts University School of Medicine, Boston, Massachusetts
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Address for correspondence and reprint requests: Tara Lagu, MD, MPH, Center for Quality of Care Research, Baystate Medical Center, 280 Chestnut Street, 3rd Floor, Springfield, MA 01199; Telephone: 413-794-7688; Fax: 413-794-8866; E-mail: lagutc@gmail.com

Abstract

BACKGROUND

Because relative value unit (RVU)-based costs vary across hospitals, it is difficult to use them to compare hospital utilization.

OBJECTIVE

To compare estimates of hospital utilization using RVU-based costs and standardized costs.

DESIGN

Retrospective cohort.

SETTING AND PATIENTS

Years 2009 to 2010 heart failure hospitalizations in a large, detailed hospital billing database that contains an itemized log of costs incurred during hospitalization.

INTERVENTION

We assigned every item in the database with a standardized cost that was consistent for that item across all hospitals.

MEASUREMENTS

Standardized costs of hospitalization versus RVU-based costs of hospitalization.

RESULTS

We identified 234 hospitals with 165,647 heart failure hospitalizations. We observed variation in the RVU-based cost for a uniform “basket of goods” (10th percentile cost $1,552; 90th percentile cost of $3,967). The interquartile ratio (Q75/Q25) of the RVU-based costs of a hospitalization was 1.35 but fell to 1.26 after costs were standardized, suggesting that the use of standardized costs can reduce the “noise” due to differences in overhead and other fixed costs. Forty-six (20%) hospitals had reported costs of hospitalizations exceeding standardized costs (indicating that reported costs inflated apparent utilization); 42 hospitals (17%) had reported costs that were less than standardized costs (indicating that reported costs underestimated utilization).

CONCLUSIONS

Standardized costs are a novel method for comparing utilization across hospitals and reduce variation observed with RVU-based costs. They have the potential to help hospitals understand how they use resources compared to their peers and will facilitate research comparing the effectiveness of higher and lower utilization. Journal of Hospital Medicine 2013;8:373–379. © 2013 Society of Hospital Medicine

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