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Original Scientific Article
Length of Stay Has Minimal Impact on the Cost of Hospital
Admission
Paul A Taheri, MD, MBA, FACS, David A Butz, PhD, Lazar J Greenfield,
MD, FACS
Background: Hospital cost containment, cost reduction,
and alternative care delivery systems continue to preoccupy health
care providers, payers, employers, and policy makers throughout
the United States. The universal metric for gauging the success
of these efforts is hospital length of stay (LOS). Reducing the
LOS purportedly yields large cost savings. The purpose of this
study is to assess precisely how much hospitals save by shortening
LOS.
Study Design: We reviewed the cost-accounting records
of all surviving patients (n = 12,365) discharged from our academic
medical center during fiscal year 1998 with LOS of 4 days or
more. Actual costs were identified through the University of
Michigan cost-accounting system. Individual patient costs were
broken out on a daily basis and then decomposed further into
variable direct, fixed direct, and indirect categories. The population
was analyzed by determining the incremental resource cost of
the last full day of stay versus the total cost for the entire
stay. The data were also stratified by LOS and by surgical costs.
An analysis of all trauma patients was then performed on all
patients discharged from the hospital's adult level I trauma
center (n = 665). Costs were determined on specific days, including
admission day, each ICU day, day of discharge from the ICU, and
each of the last 2 days before the discharge day.
Results: The incremental costs incurred by patients
on their last full day of hospital stay were $420 per day on
average, or just 2.4% of the $17,734 mean total cost of stay
for all 12,365 patients. Mean end-of-stay costs represented only
a slightly higher percentage of total costs when LOS was short
(eg, 6.8% for patients with LOS of 4 days). Even when the data
were stratified to focus on patients without major operations,
the $432 average last-day variable direct cost was only 3.4%
of the $12,631 average total cost of care. A focus on the trauma
center helps to explain this phenomenon. For our trauma center,
variable direct costs accounted for 42% of the mean total cost
per patient of $22,067. The remaining 58% was hospital overhead
(fixed and indirect costs). The median variable direct cost on
the first day of admission is $1,246, and the median variable
direct cost on discharge is $304. Approximately 40% of the variable
costs are incurred during the first 3 days of admission.
Conclusions: For most patients, the costs directly
attributable to the last day of a hospital stay are an economically
insignificant component of total costs. Reducing LOS by as much
as 1 full day reduces the total cost of care on average by 3%
or less. Going forward, physicians and administrators must deemphasize
LOS and focus instead on process changes that better use capacity
and alter care delivery during the early stages of admission,
when resource consumption is most intense.
References
Introduction
| Methods
| Results
| Discussion
| References
JACS |
