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Concentration of High-Cost Patients in Hospitals and Markets
Nancy D. Beaulieu, PhD; Karen E. Joynt, MD, MPH; Robert Wild, MS, MPH; and Ashish K. Jha, MD, MPH
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Concentration of High-Cost Patients in Hospitals and Markets

Nancy D. Beaulieu, PhD; Karen E. Joynt, MD, MPH; Robert Wild, MS, MPH; and Ashish K. Jha, MD, MPH
High-cost patients are only modestly concentrated in specific hospitals and healthcare markets.
Similar to the hospital analysis, we found only a modest concentration of high-cost patients in the markets. The percentage of Medicare beneficiaries in each HRR considered high-cost varied modestly across communities (eAppendix Figure 2). In the 10% of markets with the highest proportion of high-cost patients, on average, 13% of beneficiaries were high-cost compared with 7% of beneficiaries in the lowest decile of concentration. The 30 HRRs with the highest concentration of high-cost patients—representing 10% of all HRRs in the United States—accounted for 9.7% of Medicare costs. The median annual per-beneficiary total standardized cost in these HRRs was $14,193 per year in high-concentration markets compared with $11,077 in all other markets (Table 3).

Comparing High-Concentration Hospitals Versus Other Hospitals

We found substantial differences in the characteristics of hospitals that disproportionately care for high-cost patients (ie, the high-concentration hospitals) versus other institutions in bivariate (eAppendix Table 1) and multivariate (Table 4) analyses. The hospitals with the greatest proportion of claims from high-cost patients were more likely to be for-profit hospitals and teaching hospitals. Possibly reflecting resource constraints, high-concentration hospitals were more likely to receive disproportionate share payments and to have lower nurse-to-patient staffing ratios (although the latter was found only in bivariate analyses). High-concentration and lower-concentration hospitals scored similarly on many quality metrics; however, high-concentration hospitals were more likely to have higher 30-day readmission rates and slightly lower 30-day mortality rates (Table 4 and eAppendix Table 1).

Differences Between Markets With More Versus Fewer High-Cost Patients

We found significant differences between the 30 HRRs with the highest concentration of high-cost patients and the 276 other HRRS with lower concentrations of high-cost patients. In bivariate analyses, high-concentration HRRs were more likely to have a higher percentage of beneficiaries who were black (18.5% vs 10.1%; P = .0009), living in poverty (19.1% vs 15.5%), and living in urban areas (82.2% vs 71.3%) (eAppendix Table 2). High-concentration HRRs also had a greater supply of specialists—but an equal supply of total physicians—and a lower supply of long-term hospital beds despite a higher population density.

High-concentration HRRs have both high costs of care and high rates of care utilization. In high-concentration HRRs, the Dartmouth Hospital Care Intensity Index (1.39 for high-concentration hospitals and 0.94 for non–high-concentration hospitals) and the Medicare end-of-life spending measure ($79,446 for

concentrated HRRs and $65,538 for nonconcentrated HRRs) were both significantly higher in high-concentration HRRs than in lower-concentration HRRs. Although the general pattern of these findings held in multivariate analyses (Table 5), supply-side factors and end-of-life spending of the market were more influential in the likelihood of being high-concentration than sociodemographic characteristics of the market.

DISCUSSION

We examined the concentration of high-cost patients in hospitals and markets and found only a modest degree of concentration. However, the hospitals and markets that disproportionately care for high-cost beneficiaries were markedly different than those that cared for fewer such patients: in general, these hospitals were either academic teaching or for-profit institutions operating in urban settings and serving a greater proportion of low-income patients. Similarly, we saw differences between the markets that were more concentrated versus not, with concentrated markets having a greater supply of specialists and a lower supply of long-term care beds. Spending in the last 6 months of life was also significantly higher in high-cost concentration HRRs. Taken together, these findings suggest that although high-cost patients are widely distributed, particular provider and delivery system characteristics are associated with a higher degree of concentration.

These findings have important implications for our approach to caring for high-cost beneficiaries. Although there must be a broad approach to identifying and caring for these patients, our findings suggest that we must pay special attention to the providers where these patients receive their care. The high-concentration hospitals were more likely to be teaching hospitals, which may reflect the more specialized and costly types of care provided in these institutions. However, high-concentration hospitals were also more likely to be for-profit; whether this reflects differences in practice patterns or patient mix is unclear and warrants further examination. Additionally, given that the high-concentration hospitals tended to care for a poorer population, it is possible that the higher costs were reflective of a greater degree of medical and social need. Initiatives like the Disproportionate Share Hospital (DSH) program were designed for this reason and provide additional payments to help safety net providers care for the poor. Whether DSH payment cuts under the Affordable Care Act, in conjunction with insurance expansion, will ultimately hamper or help these facilities that care for high-cost beneficiaries is unclear.

Limitations

There are important limitations to our study. First, our analyses are based on data for the traditional FFS Medicare population; the patterns of high-cost concentration may differ in other populations. Second, our measure of patient costs did not include prescription drug expenditures. However, given that drug costs constitute approximately 10% of total healthcare spending, small differences for this kind of expenditure are unlikely to explain our findings. Third, we used the most recent Medicare data available at the time of our analysis (calendar year 2012), but patterns may have changed in more recent years. Fourth, we used the 10th percentile as our cutoff for being considered high-cost and high-concentration. This cutoff has been used by our group and others in previous research1,5 and was chosen to allow a population large enough to be nationally representative, but small enough to represent potential targets for intervention to reduce costs; nevertheless, cost is a continuous variable. The use of alternative cutoffs (eg, the top 1% or 5% of spenders, as has also been examined previously)1,6 might yield different patterns in cost concentration. Finally, our multivariate analyses reflect cross-sectional associations and the relationships identified cannot be interpreted as causal. Furthermore, we could not address the endogeneity of hospitals’ location and strategy decisions.

CONCLUSIONS

High-cost beneficiaries are only modestly concentrated in specific hospitals and healthcare markets; as such, efforts to efficiently manage costs and care among the high-cost cohort should remain broad. However, the providers and communities where these patients disproportionately receive their care are meaningfully different, suggesting that additional research on the mechanisms underlying these differences might benefit policy efforts to improve care for these high-cost beneficiaries. 

Author Affiliations: Department of Health Care Policy, Harvard Medical School (NDB, RCW), Boston, MA; Department of Health Policy and Management, Harvard T.H. Chan School of Public Health (KEJ, AKJ), Boston, MA.

Source of Funding: Rx Foundation.

Author Disclosures: The authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article. 

Authorship Information: Concept and design (NDB, AKJ, KEJ); acquisition of data (NDB); analysis and interpretation of data (NDB, KEJ, RCW); drafting of the manuscript (NDB, AKJ, KEJ, RCW); critical revision of the manuscript for important intellectual content (NDB, AKJ, KEJ); statistical analysis (NDB, RCW); obtaining funding (AKJ); administrative, technical, or logistic support (NDB); and supervision (NDB, AKJ).

Address Correspondence to: Ashish K. Jha, MD, MPH, Harvard T.H. Chan School of Public Health, 42 Church St, Cambridge, MA 02138. E-mail: ajha@hsph.harvard.edu.
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