Mo Money Mortality: Cost and Value in the PICU*

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In 1997, Christopher Wallace, better known as “The Notorious B.I.G.,” released the single “Mo Money Mo Problems.” The chorus of this popular song includes the line, “I don’t know what they want from me, it’s like the more money we come across, the more problems we see” (1). Today’s physicians likely feel similar. As treatments and technology have rapidly proliferated leading to remarkable capabilities, the problems that arise from excess medical care have begun to take center stage in national discussions related to quality and safety (2). In addition, despite being surrounded by daily messages that healthcare is too costly, information about the cost of the services physicians provide is not readily available and the vast majority do not know how they compare to their peers (3–5).
Nearly 2 decades ago, investigators reported in a single-center study that pediatric critical care patients had superior short-term and long-term survival when compared with adult patients, though hospital costs were similar. We might infer from this that pediatric critical care delivers better quality medicine for the same cost, or higher healthcare value (6). However, the relationship between risk-adjusted mortality and cost specifically in PICUs has not been examined. To evaluate this relationship, Gupta and Rettiganti (7), in this issue of Pediatric Critical Care Medicine, conducted a post hoc analysis of a large multicenter, administrative database, The Pediatric Health Information Systems, which includes billing data, discharge data, and patient demographics. Using this database, the authors examined the estimated costs and risk-adjusted mortality of common PICU admission indications for nearly 1 million patients across 47 different hospitals. They demonstrated significant variation in costs per case between hospitals; the differences were nearly two-fold, with median cost per patient of $42,181 at low-cost hospitals and $82,588 at high-cost hospitals, despite these hospitals having similar risk-adjusted mortality. Furthermore, by comparing the three highest performing hospitals (i.e., lowest cost and lowest risk-adjusted mortality) versus the four lowest performing hospitals (i.e., highest cost and highest risk-adjusted mortality), the increase in mortality in the low-performance hospitals remained despite propensity matching for patient and center characteristics.
How can the findings of this study be best understood? Before moving forward, one must have a basic understanding around hospital accounting (Table 1) (8). Hospital costs include both the direct and indirect costs of providing care for a patient. Direct costs are those costs clearly and directly associated with an activity or service for a patient. The indirect costs, sometimes called the “overhead costs,” are those costs incurred by the hospital that are not directly involved in providing a service for a patient. Importantly, costs differ from hospital charges, which are the hospital’s list prices for their services—the numbers that show up on an itemized bill. To further complicate the situation, neither charges nor costs are what a hospital usually receives as reimbursement for services rendered. Rather reimbursement is often a negotiated per diem amount, diagnosis-related group–based payment, or negotiated percent of charges, which differ by payer. The study by Gupta and Rettiganti (7) estimated total hospital costs (direct plus indirect costs) by using hospital and department specific cost-to-charge ratios that were then adjusted for regional differences and indexed to 2010 dollars. The use of estimated costs is superior to charge data as charges significantly overestimate the actual cost of care, both in terms of the hospital’s costs to deliver the services and the cost to the payer for these services (reimbursement).
Although a basic understanding of hospital financing is relevant to this discussion, for clinicians, the most important term to understand is “healthcare value.

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