This week, JAMA IM released a nice study profiling patients on observation status for the years 2010-11. While only involving one site, the large sample and thorough accounting of data enhances our knowledge of the growing obs trend.
The paper, along with Bob Wachter’s commentary, deserve a read.
I wish to highlight two findings–both of which I cite in the table below:
–In red, you will notice the time general medicine patients spent in observation mode. Only a third of patients remained in a unit less than 24 hours. The most common DRG was chest pain (at 12%). Not what the architects of observation units had intended I am sure.
–In green, compare the delta between cost and reimbursement when gen med patients boarded in an observation unit versus those directed to the wards. Given the choice between admitting an individual and risking a denial, or more ominously, if the patient returns within 30 days of discharge, do you choose inpatient status with the lesser loss? Or rather, do you take the devil you know, observe in your unit, and take the greater hit?
The answer depends on your payer mix and aggregate readmission burden. I am willing to bet the answer will vary at different institutions.
The savings envisioned with obs unit uptake accrue to the system, not the hospital. Once we learn the math, as other policy missteps demonstrate, the unexpected occurs. If studies replicate the findings above, the observation unit as optimal strategy, envisioned as “penalty prophylaxis,” may prove financially untenable in some hospitals.
We will likely experience a rule change from CMS before we see gaming on these lines however, as Bob alludes to in his commentary. The confusion current policy creates for hospitals, beneficiaries, and providers cannot continue indefinitely.