Post-Surgery Setting and Relative Costs

Post-acute care has been fingered as one of the drivers of excessive Medicare spending growth.  There is substantial variation across hospitals in regard to post-acute care use and costs.  A study in Health Affairs uses Medicare data from 2009 to 2012 on care following three common surgical procedures, hip replacement, coronary artery bypass grafting and colectomy, to identify potential sources of the variation and any spending that might be reduced.   (HA Article)    After these surgeries a patient might be discharged with no followup care, with home health care, with outpatient physical therapy, to a skilled nursing facility, to a rehab facility or some combination of these.  The researchers evaluated a variety of factors to see what might account for variation, including regional price differences, patient case mix and intensity of services within the various post-acute settings.  About half of patients with the three surgical procedures had some form of post-acute care.  There is substantial variation, with hospitals in the top quintile spending about 129% more on average for post-acute care for hip replacement than hospitals in the lowest quintile of spending.  The variation is 103% for post-acute care after CABG and 82% for that after colectomy.

Patients at hospitals in the highest spending quintile for hip replacement post-acute care, for example, were more likely to be older and to have had a post-operative complication.  The hospitals were more likely to be teaching facilities and for-profit and to be located in the Northeast.  Spending on inpatient rehabilitation facilities tended to be both the largest single source of post-acute spending and the greatest factor in spending variation.  Choosing to use either a rehab facility or a skilled nursing one explained one-half to three-quarters of the variation in post-acute spending.  The message is pretty clear, avoid those settings for post-acute care unless there is some very clear reason why a better outcome will occur as a result of such use.   As a method of controlling post-acute care costs, hospitals are increasingly being subjected to, or in some cases can volunteer for, bundled or episode payments.  Understanding variation, and reasons for that variation, in post-acute care can help these facilities direct use toward settings that appear to offer equal outcomes at a lower cost.  It may also help health plans and other payers as they seek to effectively manage such care.