Diagnosis-Related Group–Adjusted Hospital Costs Are Higher in Older Medical Patients with Lower Functional Status

Authors

  • Kenneth H. Chuang MD,

    1. From the Veterans Affairs National Quality Scholars Fellowship Program
    2. Division of Geriatrics, San Francisco VA Medical Center and University of California San Francisco, San Francisco, California
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  • Kenneth E. Covinsky MD, MPH,

    1. Division of Geriatrics, San Francisco VA Medical Center and University of California San Francisco, San Francisco, California
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  • Laura P. Sands PhD,

    1. Purdue University School of Nursing, West Lafayette, Indiana
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  • Richard H. Fortinsky PhD,

    1. Center on Aging and Division of Geriatrics, University of Connecticut Health Center, Farmington, Connecticut
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  • Robert M. Palmer MD, MPH,

    1. Section of Geriatric Medicine, Cleveland Clinic Foundation, Cleveland, Ohio.
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  • C. Seth Landefeld MD

    1. From the Veterans Affairs National Quality Scholars Fellowship Program
    2. Division of Geriatrics, San Francisco VA Medical Center and University of California San Francisco, San Francisco, California
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  • This work was supported by grants from the National Institute on Aging (AG10418; AG00412) and the John Hartford Foundation (97299, 2000–0218). Dr. Chuang was supported by the VA National Quality Scholars Fellowship program. Dr. Covinsky was supported in part by an independent investigator award (K02HS00006-01) from the Agency for Healthcare Research and Quality and a Paul Beeson Faculty Scholarship in Aging Research from the American Federation for Aging Research.

  • An abstract of this study was presented at the annual meetings of the Society of General Internal Medicine in Atlanta, Georgia, May 3, 2002, and the American Geriatrics Society in Washington, DC, May 10, 2002.

Address correspondence to Kenneth Chuang, MD, Division of Geriatrics, VA Medical Center, 4150 Clement St, 181G, San Francisco, CA 94121. E-mail: kchuang@medicine.ucsf.edu

Abstract

Objectives: To determine whether hospital costs are higher in patients with lower functional status at admission, defined as dependence in one or more activities of daily living (ADLs), after adjustment for Medicare Diagnosis-Related Group (DRG) payments.

Design: Prospective study.

Setting: General medical service at a teaching hospital.

Participants: One thousand six hundred twelve patients aged 70 and older.

Measurements: The hospital cost of care for each patient was determined using a cost management information system, which allocates all hospital costs to individual patients.

Results: Hospital costs were higher in patients dependent in ADLs on admission than in patients independent in ADLs on admission ($5,300 vs $4,060, P<.01). Mean hospital costs remained higher in ADL-dependent patients than in ADL-independent patients in an analysis that adjusted for DRG weight ($5,240 vs $4,140, P<.01), and in multivariate analyses adjusting for age, race, sex, Charlson comorbidity score, acute physiology and chronic health evaluation score, and admission from a nursing home as well as for DRG weight ($5,200 vs $4,220, P<.01). This difference represents a 23% (95% confidence interval=15–32%) higher cost to take care of older dependent patients.

Conclusion: Hospital cost is higher in patients with worse ADL function, even after adjusting for DRG payments. If this finding is true in other hospitals, DRG-based payments provide hospitals a financial incentive to avoid patients dependent in ADLs and disadvantage hospitals with more patients dependent in ADLs.

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