Extent and sources of geographic variation in Medicare end-stage renal disease expenditures.

Geographic variations in practices and expenditures have been widely documented, leading to concerns that care in some regions is clinically suboptimal and/or economically inefficient. Our objectives are to determine the extent and sources of geographic variation in Medicare expenditures per patient with end-stage renal disease (ESRD) per year. The study population included all patients with ESRD with Medicare as primary payer during 1997 (n = 284,670). Medicare expenditures were summarized at the hospital referral region (HRR) level. Using regression analysis, we estimated the relationship between expenditures and demographics, case mix, dialysis provider characteristics, distribution of patients across renal replacement therapy modalities, standardized hospitalization ratios, and healthcare wages. Spending per patient-year varied threefold across HRRs, ranging from $17,791 to $59,025 (mean, $38,966 +/- $6,774 [SD]). The regression equation explained 80% of this variation. Although several demographic and case-mix indicators that have been related to spending at the individual level were statistically significant predictors of spending at the HRR level, they did not show enough geographic variation to explain a large fraction of spending variation. Rather, patient distributions across renal replacement modalities, hospitalization patterns, and healthcare wages were the most powerful predictors of spending. Compared with Medicare generally, both the mean and SD of ESRD expenditures were approximately seven times larger. The substantial geographic variability in expenditures for patients with ESRD indicates the potential for improving efficiency and quality of care. Interventions designed to increase transplantation rates, ensure access to peritoneal dialysis, and reduce hospitalization appear most promising.

Use of community versus individual socioeconomic data in predicting variation in hospital use.

OBJECTIVES: (1) To examine the association of socioeconomic characteristics (SES) with hospitalization by age group, and when using measures of SES at the community as opposed to the individual level. (2) Thus, to support the inference that socioeconomic factors are important in the analysis of small area utilization data and address potential criticisms of this conclusion. DATA SOURCES: The 1989 Michigan Inpatient Database (MIDB), the 1990 U.S. Census, the 1989 Area Resource File (ARF), and the 1990 National Health Interview Survey (NHIS). STUDY DESIGN: A qualitative comparison of socioeconomic predictors of hospitalization in two cross-sectional analyses when using community as opposed to individual socioeconomic characteristics was done. DATA EXTRACTION. Hospitalizations (excluding delivery) were extracted by county from the MIDB and by individual from the NHIS. SES variables were extracted from the U.S. Census for communities and from the NHIS for individuals. Measures of employment for communities were from the ARF and information on health insurance and health status of individuals from the NHIS. PRINCIPAL FINDINGS: Both analyses show similar age-specific patterns for income and education. The effects were greatest in young adults, and diminished with increasing age. Accounting for multiple admissions did not change these conclusions. In the individual-level data the addition of variables representing health and insurance status substantially diminished the size of the coefficients for the socioeconomic variables. CONCLUSIONS: By comparison to parallel individual-level analyses, small area analyses with community-level SES characteristics appear to represent the effect of individual-level characteristics. They are also not substantially affected by the inability to track individuals with multiple readmissions across hospitals. We conclude that the impact of SES characteristics on hospitalization rates is consistent when measured by individual or community-level measures and varies substantially by age. These variables should be included in analyses of small area variation.

Changing patterns of hospital use for patients with musculoskeletal disease in Michigan, 1980 to 1987.

Over the past 10 years there have been dramatic changes in health care financing in the United States, such as Medicare's Prospective Payment System for hospitalized Medicare beneficiaries, and in health services delivery, such as the growth in health maintenance organizations and other forms of managed care. These changes have occurred largely in response to payors' concerns about the rising cost of health care. A study of such changes in financing and delivery, and how specific groups of patients are affected is necessary so that the effects of these changes on patients' health can be determined. We examined the hospitalization rates for patients with musculoskeletal diseases in Michigan from 1980 through 1987. During this period, the overall age-adjusted hospitalization rates decreased 7.0% per year (p = 0.001). The decrease occurred less for surgical discharges (6.0% per year) than for medical discharges (8.6% per year) (p < 0.001). While these overall trends are of interest, they obscure disease-specific trends that vary significantly from both the overall, and the medical and surgical trends. For example, while surgical discharges, in general declined, procedures related to major joint and limb reattachment (DRG #209) increased at a rate of 6.3% per year. And while medical discharges in general decreased over this period, discharges for osteomyelitis increased 5.4% per year. The patterns of disease-specific trends offers insight into the possible causes for these changes. Finally, it is important to understand the epidemiology of hospital use to evaluate the effects of new medical care delivery and payment systems on the care of subsets of patients.

Small area analysis of hospital discharges for musculoskeletal diseases in Michigan: the influence of socioeconomic factors.

PURPOSE: The rise in health care costs has occasioned a number of initiatives in an attempt to reduce the rate of increase. Despite the growth of health maintenance organizations and preferred provider organizations and the introduction of Medicare's prospective payment system, health care costs have continued to increase. Coincident with these efforts, a number of researchers have shown that there exists wide variation in age-adjusted hospital discharge rates, which translate into significant variation in per capita expenditures. Much of the focus on the reasons for hospital admission variability has been on physician practice variation. If most of the variation in hospital discharge rates is due to physician practice style, then payment systems can be developed (e.g., capitation) that limit physician practice variation without harming patients. We examined socioeconomic factors in Michigan communities to assess their association with hospital discharge rates for patients with musculoskeletal diseases. PATIENTS AND METHODS: Data on hospital discharges from 1980 and 1987 were taken from the Michigan Inpatient Data Base. All admissions from the major diagnostic category 8, diagnosis-related group (DRG) 209-256 were included. Zip code-specific hospitalization data were grouped into small geographic areas or hospital market communities (HMCs). Discharge rates were calculated, and profiles of the socioeconomic characteristics of each of the HMCs were developed. A Poisson regression model with an extrasystematic component of variance was used to analyze the association of HMC socioeconomic characteristics with age-adjusted hospital use. RESULTS: We found that four socioeconomic variables, average annual income per capita, percent of the population with four years of college, percent of the population living in an urban area, and percent of families with incomes below the poverty line, explained 26.6% (R2) of the variation in overall hospital discharge rates (p less than 0.001). Moreover, we found that the ability of the model to explain variability was influenced by the type of disease, and that these socioeconomic variables had a consistent effect across the range of DRGs. Finally, we noted that, over the period of 1980 to 1987, socioeconomic factors remained important in explaining hospital use despite the dramatic changes in the delivery of care over this period. CONCLUSION: Socioeconomic factors play a significant role in explaining the observed variation in hospital discharge rates for musculoskeletal diseases. Models utilizing only physician practice variation to account for the population-based differences in discharge rates are overly simplistic. In order to ensure that vulnerable subsets of the population are not harmed by the introduction of cost-containment strategies based on simplistic models, more attention must be paid to the socioeconomic and epidemiologic factors related to hospital use.

Small-area analysis of gastrointestinal disease hospital discharge variation: are the poor at risk?

Capitation plans may place their enrollees at risk of rationed services if they do not adjust for underlying patient characteristics that dictate differing levels of care. To assess the degree to which population-based socioeconomic characteristics are associated with hospital use, this study explored small-area variation in hospital discharges for gastrointestinal and liver (GI) Diagnosis Related Groups (DRGs). Utilizing a 1980 Michigan database of 1.5 million discharges, we constructed age-adjusted, population-based discharge rates for the GI DRGs. We then evaluated the effect of poverty, defined by the percent of households in a hospital market community below the poverty line. Using regression techniques, we found that poverty explained 27.5% of the variation in GI hospital discharges, with the poor admitted more often (p less than 0.0001). Using cost weighted discharge rates as the dependent variable, we found that poverty explained 20.3% (p = 0.0003) of the variation in cost weighted discharges. These results suggest that poverty explains a significant amount of variation in hospital discharges and has a significant effect on associated small-area hospitalization costs in GI diseases. Practicing gastroenterologists and surgeons need to be aware of factors that influence patients utilizing their services in order to retain their role as patient advocates as changes in payment systems are suggested.

Micro-area variation in hospital use.

Many recent studies have demonstrated that hospital utilization rates vary widely across small geographic areas. The variation is often attributed to the style of practice of the provider. This study demonstrates that hospital utilization varies widely between "micro" areas within individual hospital market areas. Further, the study demonstrates that hospital utilization rates within a hospital market area are more similar to each other than to rates in "micro" areas within other hospital market areas. After adjustment for available demographic, socioeconomic, and epidemiological factors, the utilization rates within "micro" areas are highly related to the group of hospitals that dominates the market area. After simultaneously adjusting for age and poverty, the market share-dominant group explains 35 percent of the variance in surgical use rates of "micro" areas and 39 percent of the variance in medical use rates.

Variation in hospital admissions among small areas. A comparison of Maine and Michigan.

Analysis of age-adjusted hospital admission profiles among small geographic areas has shown marked variation in hospital admissions for both surgical and medical cases in areas ranging from Maine to Manitoba. Much of the work has been led by John Wennberg and has focused on rural areas. This study examines the degree of variation in hospital admissions in small areas in the state of Michigan to determine whether those diseases that demonstrated high variation in Maine also demonstrated the same degree of variation in Michigan. The data on the degree of variation in 111 modified diagnosis-related groups (M-DRGs) from the state of Maine were supplied by Dr. Wennberg. Using the same M-DRGs, we defined age-adjusted, population-based hospital admission rates for the lower peninsula of Michigan for 1980 among 60 previously defined hospital marked communities. The observed hospital discharge counts in each of the M-DRGs were compared to the expected counts in each of the 60 communities, where the expected count was based on an indirect age adjustment. Both the Maine and Michigan small area data were expressed by the M-DRG's systematic standard deviation in which random variation has been accounted for via a Poisson probability model. It was found that the systematic standard deviations of the M-DRGs in Maine and the M-DRGs in Michigan strongly correlated with a Spearman correlation coefficient of 0.71 (P less than 0.001).(ABSTRACT TRUNCATED AT 250 WORDS)

Patterns of surgical and nonsurgical hospital use in Michigan communities from 1980 through 1984.

Hospital discharge rates vary substantially among 60 communities in Michigan. (R2 = 90 percent and R2 = 85 percent of the systematic variance is explained by community effects for nonsurgical and surgical discharges, respectively.) The ranking of communities by discharge rates is stable over a five-year period (Spearman rho = 0.78 for nonsurgical discharges and 0.72 for surgical discharges). Surgical discharge rates decreased substantially (4 percent per year) over this time period, while nonsurgical rates showed no consistent pattern. Communities with exceptional discharge rates showed no substantial or significant regression toward the mean through the five-year study.

Does race affect hospital use?

Based on 1980 hospital discharges in areas in the State of Michigan, with substantial Black populations, Blacks use approximately 50 per cent more hospital care than Whites, but about half this difference is associated with use in specific communities which affects both White and Black use. Black use is not associated with community size, per cent of Blacks, or available beds and doctors. After controlling for mortality and socioeconomic status, a small statistically non-significant difference in race-specific use remains for 23 Michigan communities. The elimination of race as an explainer of hospital use suggests progress in assuring equal access to hospitals, but differences in poverty, mortality, and some specifics of use remain.

Measuring community hospital service in Michigan.

Using discharge abstracts from Michigan hospitals, we divided the state into hospital use communities with measured populations. We constructed population-based rates measuring use, cost, and some aspects of quality. The results cover 54 communities comprising 90 percent of the Michigan population and ranging in size from Detroit (population 600,000) to very small (population less than 25,000) communities. Age-adjusted patient days per 1,000 population, length of stay, cost per person per year, hospitalization rates for surgery, trauma and vascular disease, and childbirth problems show large variations, generally ranging from 2 to 1. High values usually are positively associated with each other and with population size. Patient days per 1,000 (mean 1,114, range 600-1,700) and cost per person(mean +223, range +110-+290) are distributed such that almost 75 percent of communities are below the mean. We believe this information will be useful to community hospital trustees, physicians, and administrators.