January 10, 2017 1:00 PM

After Surgery, Where Hospitals Send Patients Makes a Big Cost Difference

A new study finds hospitals vary widely on where they send patients for post-surgical care — and that accounts for huge variation in cost.

A woman considering outpatient care VS inpatient care

Thousands of times a day, doctors sign the hospital discharge papers for postoperative patients and send them off to their next destination. About half of those patients will get some sort of post-surgical care to help them heal and get back into life.

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But a new study finds huge variation in where patients end up for this care, depending on where they had their operations. And that variation in turn leads to huge differences in how much their care costs, the research shows.

The study, published in Health Affairs by a University of Michigan team, looks at the impact of sending patients home with some in-house or outpatient help, compared with sending them to a skilled nursing facility or an inpatient rehabilitation center.

The researchers examined the type and cost of post-hospital care that hundreds of thousands of Medicare-covered patients received in the 90 days after one of three common operations: hip replacement, heart bypass surgery or removal of a part of the colon, called colectomy. The researchers divided patients up by the hospital in which they had the operation and mapped over a three-year period how the hospitals compared.

Some hospitals had total average post-acute care costs three times as high as other hospitals, the team found.

But it wasn’t until researchers examined the type of post-acute care settings where each of these hospitals tended to send their patients that these cost differences shrank markedly.

In the end, a hospital’s decision to send a post-surgery patient to an inpatient rehabilitation facility was the key driver of total 90-day post-hospital costs. To a lesser extent, the decision to send the patient to a skilled nursing facility also drove costs, compared with prescribing in-home care or outpatient rehabilitation.

Doctors have little official guidance or objective measurements to help them decide which patients will do best in each setting, says Lena Chen, M.D., M.S., the lead author of the study and an assistant professor at the U-M Medical School.

“Based on these findings, and others, we can see that it’s going to be really important to find out which type of care setting will have value to which patients, and when,” she says. “We need to better understand how to do what’s best for each patient.”

The need for such tools is even more important now as Medicare increasingly penalizes or financially rewards hospitals for the total cost of their surgical patients’ care — even in the weeks after the patients leave the hospital.

Accountable care organizations and bundled payment programs are all incentivizing hospitals and health systems to do things that will get the most value out of Medicare dollars, including spending on post-hospital care. For instance, the Hospital Value-Based Purchasing Program is penalizing hospitals whose patients cost more than patients treated by their peer hospitals for “episodes of care” that start just before a patient enters the hospital and end 30 days after he or she leaves the hospital.

"It’s going to be really important to find out which type of care setting will have value to which patients, and when. We need to better understand how to do what’s best for each patient."
Lena Chen, M.D., M.S.

More about the study

The researchers looked at Medicare data from 2009 to 2012, using funding from the National Institute on Aging and the Agency for Healthcare Research and Quality.

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The data came from 231,744 hip replacement patients treated in 1,831 hospitals; 218,940 bypass patients treated in 1,056 hospitals; and 189,229 colectomy patients treated in 1,876 hospitals. The researchers accounted for differences in patient populations and the prices for care in different parts of the country.

Even though skilled nursing facilities charge for every day a patient stays, the time in such facilities didn’t matter nearly as much as the decision to send a patient to such a facility or to a rehab facility, compared with the lower-cost home-based or outpatient care.

How to decide which patients could benefit most from each type of post-hospital care will rely on good uniform measures of how well patients are functioning at the time they leave the hospital — and the time they finish their post-hospital care. The agency that runs Medicare is testing a tool called the Continuity Assessment Record and Evaluation (CARE) Item Set that will help with this.

But also important, Chen says, is the amount of social support a patient has: whether he or she has a caregiver to help at home or to provide transportation to outpatient rehab appointments, for instance. The availability of high-quality post-acute care in the local area around the patient also matters. Those factors couldn’t be included in this study.

A note for providers

Educating patients and families about their post-surgery options before and after the operation is also important, Chen says.

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If patients understand the options and how the type of care differs from setting to setting, they and their loved ones can express preference. And the doctor can factor this in while writing discharge orders, as can the care team while making the arrangements for post-hospital care.

While much effort is going into helping reduce the length of stay in nursing facilities, Chen notes, the need for research on which patients get the most benefit in different post-acute care settings may be even greater from a cost perspective.

“Once providers better understand what setting has value and when, the payment system can better incentivize appropriate decisions,” she notes. “Right now, we know so little about what is the best and who gets the most benefit from the highest-cost options.”

Chen, a member of the U-M Institute for Healthcare Policy and Innovation and the U-M Center for Healthcare Outcomes and Policy, is also serving as a senior adviser to the deputy assistant secretary for health policy in the federal Department of Health and Human Services.