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Synopsis: For all surviving patients, costs related to the last day of hospitalization were consistently minute, both as a percentage of overall costs (2.4%) and in absolute numbers ($420/d). Cost for specific subgroups followed the same trend.
Source: Taheri PA, et al. J Am Coll Surg 2000; 191(2):123-130.
Hospital length of stay (LOS) is used as a primary benchmark for judging the success of efforts to reduce health care expenditures. The purpose of this study was to assess precisely how much is saved by shortening hospital LOS. Subjects were all surviving patients (n = 12,365) with LOS more than four days who were discharged from an academic medical center during fiscal year 1998. Patient costs were analyzed using three categories: 1) variable direct costs (expenditures identified from the care of individual patients on a particular day, e.g. lab test, radiographs); 2) fixed direct costs (expenditures identified with a specific hospital department, but not with a particular patient, such as equipment and medical devices used to care for patients); and 3) indirect costs (expenditures outside individual departments, e.g., admissions, administrative salaries).
For all patients, mean LOS was 10.5 days (median, 7 days). The mean total cost per case was $17,734 ± $229, and the mean variable direct cost of the last full day before discharge was $420 ± $7. The last full day before discharge represented 9.5% of the mean LOS, but only 2.4% of the total cost of care. Costs for several subgroups were also examined. When comparisons were made between patients who had major surgery and those who did not, there was only a $36 difference in the last-day variable direct costs ($396 vs $432). Therefore, variable direct costs incurred on the last full day before discharge constituted only 1.5% of the average $26,547 average total cost for patients having major surgery. For trauma patients who spent at least three days in the ICU and at least seven days in the hospital, variable direct costs also fell below $500 per day, as was the case for all other subgroups analyzed. Mean end-of-stay costs represented only a slightly higher percentage of total costs when LOS was short (6.8% for patients with LOS of 4 days). Approximately 40% of variable costs were incurred during the first three days of admission.
To control escalating costs of health care, administrators have strived to reduce hospital LOS. Much of the focus on reducing hospital LOS is based on the assumption that "lopping one day off" at the end of a hospital stay substantially reduces expenditures. However, hospital days are not all "economically equivalent." If a patient remains in the hospital for four days, the last full day represents 25% of the total LOS. However, study findings indicated that this last day represented only 6.8% of the total cost of hospitalization.
Consequently, does LOS matter? The answer varies depending on several factors. If the hospital has excess capacity, keeping a patient in the hospital longer would not preclude other individuals from being admitted. In this situation, there would be little financial incentive to further shorten LOS. If the hospital has capacity constraints, the situation would be different because it would not be possible to admit new "high-revenue" admissions if patients were kept longer prior to discharge. An additional consideration relates to how nursing care is managed in regard to staffing ratios. The study hospital used substantial amounts of nursing overtime, which allowed staffing to be adjusted quickly depending on need. Because nursing represents the majority of end-of-stay costs, the inability to quickly adjust staffing could have a profound effect on costs.
The main finding of this study was that, in a general population and in more specific subgroups, the costs related to the last day of hospitalization were consistently minute, both as a percentage of overall cost and in absolute numbers. If targeting LOS is not a means to reduce health care costs, what options are there? First, cost reduction efforts should be shifted to the first days of hospitalization when most costs are incurred. Second, more focus should be placed on health status, clinical outcomes, and patient readmission rates, not simply on LOS. Third, all hospital facilities should be examined in order to determine whether they could be more fully used in off-peak hours when they are historically idle.