Evaluating health care delivery reform initiatives in the face of "cost disease"

Abstract

The authors analyzed historical claims data from 2007 to 2011 from the Vermont All-Payer Claims database for all individuals covered by commercial insurance and Medicaid to determine per capita inpatient expenditures, cost per discharge, and cost per inpatient day. The authors further evaluated the proportion of all health care expenditure allocated to mental health, maternity care, surgical services, and medical services. Although utilization of inpatient services declined during the study period, cost per discharge and cost per inpatient day increased in a compensatory manner. Although the utilization of inpatient services by the Medicaid population decreased by 8%, cost per discharge increased by 84%. Among the commercially insured, discharges per 1000 members were essentially unchanged during the study period and inpatient cost per discharge increased by a relatively modest 32%. The relative utilization of mental health, maternity care, surgical services, and medical services was unchanged during the study period. The significant increase in the cost of inpatient services increased the proportion of total expenditure on surgical services from 21% in 2007 to 33% in 2011. The authors conclude that although health care providers are increasingly being assessed on their ability to control health care costs while achieving better outcomes, there are many cost drivers that are outside of their control. Efforts to assess initiatives, such as patient-centered medical homes, should be focused on utilization trends and outcomes rather than cost or, at a minimum, reflect cost drivers that physicians and other providers cannot influence.