Room Costs for Common Pediatric Hospitalizations and Cost-Reducing Quality Initiatives

Abstract

BACKGROUND: Improvement initiatives promote safe and efficient care for hospitalized children. However, these may be associated with limited cost savings. In this article, we sought to understand the potential financial benefit yielded by improvement initiatives by describing the inpatient allocation of costs for common pediatric diagnoses. METHODS: This study is a retrospective cross-sectional analysis of pediatric patients aged 0 to 21 years from 48 children’s hospitals included in the Pediatric Health Information System database from January 1, 2017, to December 31, 2017. We included hospitalizations for 8 common inpatient pediatric diagnoses (seizure, bronchiolitis, asthma, pneumonia, acute gastroenteritis, upper respiratory tract infection, other gastrointestinal diagnoses, and skin and soft tissue infection) and categorized the distribution of hospitalization costs (room, clinical, laboratory, imaging, pharmacy, supplies, and other). We summarized our findings with mean percentages and percent of total costs and used mixed-effects models to account for disease severity and to describe hospital-level variation. RESULTS: For 195 436 hospitalizations, room costs accounted for 52.5% to 70.3% of total hospitalization costs. We observed wide hospital-level variation in nonroom costs for the same diagnoses (25%–81% for seizure, 12%–51% for bronchiolitis, 19%–63% for asthma, 19%–62% for pneumonia, 21%–78% for acute gastroenteritis, 21%–63% for upper respiratory tract infection, 28%–69% for other gastrointestinal diagnoses, and 21%–71% for skin and soft tissue infection). However, to achieve a cost reduction equal to 10% of room costs, large, often unattainable reductions (>100%) in nonroom cost categories are needed. CONCLUSIONS: Inconsistencies in nonroom costs for similar diagnoses suggest hospital-level treatment variation and improvement opportunities. However, individual improvement initiatives may not result in significant cost savings without specifically addressing room costs.