June 30, 2016

The 10 most costly conditions for hospitals, ranked

Daily Briefing

Sepsis was the most expensive condition for hospitals to treat in 2013, according to an analysis by the Agency for Healthcare Research and Quality (AHRQ).

AHRQ researchers used claims, coding, and cost data on 35.6 million hospital stays from 2013 to determine the costs to hospitals of treating various conditions. AHRQ did not include physician fees associated with hospitalization in its analysis.

The researchers found that that aggregate inpatient hospital costs totaled about $381.5 billion. Medicare and Medicaid beneficiaries accounted for 63 percent of these costs, while patients with commercial insurance accounted for 28 percent.

Most costly conditions

Sepsis was the most costly condition hospitals treated. While patients with sepsis represented only about 3.6 percent of hospital stays, they represented about 6.2 percent of the overall costs—equating to $23.7 billion. Researchers pointed to sepsis complications, such as organ failure, as a reason why sepsis patients are so expensive to care for.

After sepsis, the most expensive inpatient conditions were:

  1. Osteoarthritis ($16.5 billion);
  2. Childbirth and newborn care ($13.3 billion);
  3. Complications from implants, devices, or grafts ($12.4 billion);
  4. Heart attacks ($12.1 billion);
  5. Congestive heart failure ($10.2 billion);
  6. Degeneration of the spinal column, dysfunction of an intervertebral disc, and other back problems ($10.2 billion);
  7. Pneumonia ($9.5 billion);
  8. Coronary atherosclerosis ($9 billion); and
  9. Acute cerebrovascular disease ($8.8 billion).

The top five conditions accounted for about one-fifth of total aggregate hospital costs.

While childbirth and newborn care was the third-most expensive inpatient condition, the expense stems largely from its frequency. It is the most common reason for hospitalization, representing 10.6 percent of all hospital stays (Herman, Modern Healthcare, 6/28; Agency for Healthcare Research and Quality report, May 2016; Lagasse, Healthcare Finance News, 6/22; Brooks, Medscape/WebMD, 6/15).

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Don't fall into the trap of zero-sum negotiations in narrow market segments. To recast suppliers as cost management partners, give them a transparent view of the market and help them reveal their most competitive offers.

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