Pediatrics: Observation Often as Expensive as Inpatient Care

Steven Fox

May 13, 2013

Although it might be assumed that hospitalizations that take place under observational status are usually shorter in duration and consume fewer healthcare resources than those that take place under inpatient status, until now that issue has not been studied in a large cohort of pediatric patients.

Looking to fill that void, a group of researchers lead by Evan S. Fieldston, MD, MBA, MSHP, from the Children's Hospital of Philadelphia and Department of Pediatrics, Perelman School of Medicine, University of Pennsylvania, Philadelphia, conducted a retrospective study of a nationwide cohort of more than 200,000 pediatric patients. All patients were hospitalized during 2010 and included in the Pediatric Health Information System, which gathers information from 43 children's hospitals in 27 states. All patients included in the study were admitted from emergency departments, and their hospitalizations lasted no more than 2 days.

In this study, published online May 13 in Pediatrics, Dr. Fieldston and colleagues compared costs of managing patients on an observational vs inpatient basis, adjusting for age, severity, and length of hospitalization.

The investigators found that in about a third of the cases (67,230), discharged patients were assigned observational status. However, they note, the use of that classification varied considerably from hospital to hospital, ranging from 2% to 45%.

A median cost for observational stays was $2559 when room costs were included and $678 when they were not.

Further, the researchers say, 25 diagnoses accounted for nearly three quarters of observational stays.

Focusing on 4 of the most common diagnoses (asthma, viral gastroenteritis, bronchiolitis, and seizure), the investigators found that on average, observation-status hospitalizations consumed $260 less than inpatient stays, after adjusting for severity of illness, age, and length of stay. They also saw large overlaps in costs for both observational and inpatient stays.

"Resource utilization for pediatric patients under observation status overlaps substantially with inpatient-status utilization, calling into question the utility of segmenting pediatric patients according to billing status," the authors conclude.

In an invited commentary that accompanies the article, Jack Martin Percelay, MD, MPH, a pediatrician in New York City, writes, "Sherlock Holmes accused Dr Watson of seeing but not observing. Were Dr Watson a pediatric hospitalist, utilization reviewers would accuse him of observing but not hospitalizing or, more technically, of providing 'observation-level care' rather than 'inpatient-level care.' "

Dr. Percelay notes that the Fieldston study convincingly shows there is no consistent difference between observation-level and inpatient-level care as applied to the pediatric population.

"Having excluded all potential rational explanations for these differences in billing status, the sole remaining conclusion ('no matter how improbable,' as Holmes would say) is that this is an arbitrary distinction used by payers to decrease reimbursement to both hospitals and physicians."

He concludes, "The nation's children, their families, and the physicians and hospitals caring for them deserve equal treatment."

Internal funds from the Children's Hospital Association and the Children's Hospital of Philadelphia supported this study. The authors have disclosed no relevant financial relationships. Dr. Percelay has worked for McKesson Corporation as an independent contractor reviewing pediatric Inter Qual criteria for 8 of the past 10 years. He reports that his compensation has not exceeded $5000 per year.

Pediatrics. Published online May 13, 2013. Abstract

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