Financial Implications of Short Stay Pediatric Hospitalizations

Hospital costs and reimbursement for short-stay inpatient versus observation status hospitalizations for children with medical complexity

BACKGROUND

There is a lack of uniformity across hospitals in applying inpatient versus observation status for short-stay (<48 h) pediatric hospitalizations, with negative financial implications associated with observation. Children with medical complexity (CMC) represent a growing population and incur high costs of care. The financial implications of inpatient and observation status for CMC have not been studied.

OBJECTIVES

To compare costs and reimbursement for short-stay hospitalizations for CMC by inpatient and observation status, overall and stratified by payor.

METHODS

We performed a cohort study of short-stay hospitalizations for CMC from 2016 to 2021 at 10 children's hospitals reporting reimbursement in the Pediatric Health Information System and Revenue Management Program. The primary outcome was the cost coverage ratio (CCR), defined as an encounter's reimbursement divided by the estimated cost.

RESULTS

There were 89,282 encounters included. The median costs per encounter were similar across observation ($5206, IQR $3604-$7484) and inpatient ($6547, IQR $4725-$9349) encounters. For government payors, the median CCR was 0.6 (IQR 0.2-0.9) for observation encounters and 1.2 (IQR 0.8-1.9) for inpatient. For nongovernment payors, the median CCR was 1.6 (IQR 1.3-1.9) for observation and 1.6 (IQR 1.4-2) for inpatient. Government reimbursement was associated with increased risk for financial loss (OR 13.91, 95% CI 7.23, 26.77) and with a median net loss of $985,952 (IQR $389,871-$1,700,041) per hospital annually for observation encounters.

CONCLUSIONS

Government-paid observation encounters for CMC are associated with significant financial loss at children's hospitals. This reimbursement model may pose a threat to children's hospitals' ability to care for CMC.

Child Health Needs and the Pediatric Hospital Medicine Workforce: 2020-2040

Pediatric hospital medicine (PHM) established a new model of care for hospitalized children in the United States nearly 3 decades ago. In that time, the field experienced rapid growth while distinguishing itself through contributions to medical education, quality improvement, clinical and health services research, patient safety, and health system leadership. Hospital systems have also invested in using in-house pediatricians to manage various inpatient care settings as patient acuity has accelerated. National PHM leaders advocated for board certification in 2014, and the first certification examination was administered by the American Board of Pediatrics in 2019. In this article, we describe the development of the subspecialty, including evolving definitions and responsibilities of pediatric hospitalists. Although PHM was not included in the model forecasting future pediatric subspecialties through 2040 in this supplement because of limited historical data, in this article, we consider the current and future states of the workforce in relation to children's health needs. Expected challenges include potential alterations to residency curriculum, changes in the number of fellowship positions, expanding professional roles, concerns related to job sustainability and burnout, and closures of pediatric inpatient units in community hospitals. We simultaneously forecast growing demand in the PHM workforce arising from the increasing prevalence of children with medical complexity and increasing comanagement of hospitalized children between pediatric hospitalists and other subspecialists. As such, our forecast incorporates a degree of uncertainty and points to the need for ongoing investments in future research to monitor and evaluate the size, scope, and needs of pediatric hospitalists and the PHM workforce.

Association of neighborhood opportunity and pediatric hospitalization rates in the United States

We examined associations between a validated, multidimensional measure of social determinants of health and population-based hospitalization rates among children <18 years across 18 states from the 2017 Healthcare Cost and Utilization Project State Inpatient Databases and the US Census. The exposure was ZIP code-level Child Opportunity Index (COI), a composite measure of neighborhood resources and conditions that matter for children's health. The cohort included 614,823 hospitalizations among a population of 29,244,065 children (21.02 hospitalizations per 1000). Adjusted hospitalization rates decreased significantly and in a stepwise fashion as COI increased (p < .001 for each), from 26.56 per 1000 (95% confidence interval [CI] 26.41-26.71) in very low COI areas to 14.76 per 1000 (95% CI 14.66-14.87) in very high COI areas (incidence rate ratio 1.8; 95% CI 1.78-1.81). Decreasing neighborhood opportunity was associated with increasing hospitalization rates among children in 18 US states. These data underscore the importance of social context and community-engaged solutions for health systems aiming to eliminate care inequities.

Essential Concepts for Reducing Bias in Observational Studies

Randomized controlled trials (RCTs) are the gold standard study design for clinical research, as prospective randomization, at least in theory, balances any differences that can exist between groups (including any differences not measured as part of the study) and isolates the studied treatment effect. Any remaining imbalances after randomization are attributable to chance. However, there are many barriers to conducting RCTs within pediatric populations, including lower disease prevalence, high costs, inadequate funding, and additional regulatory requirements. Researchers thus frequently use observational study designs to address many research questions. Observational studies, whether prospective or retrospective, do not involve randomization and thus have more potential for bias when compared with RCTs because of imbalances that can exist between comparison groups. If these imbalances are associated with both the exposure of interest and the outcome, then failure to account for these imbalances may result in a biased conclusion. Understanding and addressing differences in sociodemographic and/or clinical characteristics within observational studies are thus necessary to reduce bias. Within this Method/ology submission we describe techniques to minimize bias by controlling for important measurable covariates within observational studies and discuss the challenges and opportunities in addressing specific variables.

Financial outcomes of high-flow nasal cannula use for bronchiolitis on the general pediatric floor

High-flow nasal cannula (HFNC) is an increasingly common treatment utilized for bronchiolitis on general pediatric hospital floors. This could present a financial burden for hospitals if reimbursement has not accounted for the increased costs associated with increased HFNC use. Pediatric Health Information System and Revenue Management Program data set discharges from 2018 to 2019 were utilized to calculate the ratio of reimbursements to costs as a cost coverage ratio (CCR). The CCR was compared by HFNC use, the severity of illness, and payor type. The CCR was highest at 1.68 for children with high severity and HFNC use but varied greatly by payor. The lowest CCR at 0.77 was seen for children with low severity and public insurance and indicated potential financial losses for these patients. This was lower than low-severity patients on HFNC with private payors (1.68) and high-severity patients on HFNC with public payors (1.18).