Top 10 Most Costly Medical Conditions for Hospitals

In 2011, there were 39 million discharges from inpatient hospital stays; the total cost for care provided that year was $387 billion, according to a statistical brief from the Agency for Healthcare Research and Quality (AHRQ).  Of that amount, $182.7 billion, or 47.2 percent, was attributable to services provided to Medicare beneficiaries.  The 7.6 million Medicaid-covered hospital stays cost $60.2 billion during 2011.  Together, Medicare and Medicaid beneficiaries accounted for 63 percent of the national inpatient hospital costs, while private insurance was responsible for 29 percent of inpatient hospital costs and 4 percent was attributed to care provided to the uninsured.

ARHQ examined data on healthcare costs from the Healthcare Cost and Utilization Project (HCUP)  to arrive at these figures.  The data represent the cost to the hospital to produce the service, not the amount paid for the service by Medicare, Medicaid, private insurers or other payers.   In addition, only hospital costs were measured; the estimates do not include physician fees and services from other providers.

Costly Conditions

The HCUP data show that hospitals spend the most on treating the following conditions for Medicare beneficiaries.  The conditions are  ranked from the conditions with the highest total costs to hospitals during 2011 to conditions with lowest costs to hospitals during 2011.  The top ten conditions  during 2011 were:

  1. septicemia
  2. osteoarthritis
  3. congestive heart failure
  4. complications resulting from device implant or graft
  5. pneumonia
  6. acute myocardial infarction
  7. coronary atherosclerosis
  8. respiratory failure
  9. cardiac dysrhythmias
  10. acute cerebrovascular disease.

Treating septicemia, or sepsis, is the leading cost for hospital inpatient stays.  In 2011, hospitals billed Medicare for 722,000 cases of septicemia that cost $12.6 billion to treat.  Hospitals spent nearly $8 billion in costs to treat osteoarthritis among Medicare beneficiaries.  ARHRQ reported that nearly 90 percent of that amount for hip or knee replacements.  Congestive heart failure, nonhypertensive was the condition with the third highest amount of cost to hospitals to treat at $7.64 billion in cost to providing services to Medicare beneficiaries in 2011.

Improving Treatment; Saving Money

Savings can be realized by designing ways to reduce the costs of these conditions. Often, simple changes in behavior or inexpensive interventions can drive cost down signficantly.  For example, the AHRQ Innovation Exchange reported on a University of California, San Francisco Integrated Nurse Leadership Program  that reduced the death rate from sepsis by nearly 50 percent over 22 months.  In the study patients were screened for sepsis upon arrival and at each shift change.  Patients who had at least two signs of sepsis received a more accurate test to determine if they had a sepsis infection, and, if results were positive, treatment was begun right away.  The implementation of this program not only reduced mortality but generated a 56 percent return on investment for the hospitals participating in the study.

A sepsis reduction program initiated at Kaiser Permanente’s Hospitals in Northern California  during 2008 resulted in nearly a $2 million savings per hospital with a total savings of $36 million over the two-year period.  In this program the average length of stay in the hospital was cut from nine to six days and mortality rates declined from 25 to 11 percent.

Examining the cost to hospitals of treating certain conditions may be the first step toward the implementation of new treatment and testing protocols. Seeing what hospitals are spending money on might spur clinicians and others to come up with simple approaches to treating conditions that they might not have otherwise considered.  Implementing these protocols for the highest cost conditions can result in not only saving lives, but making the health care system more efficient and less costly.