Entering a used practice can be like buying a used car. You just never know where it has been or how well it is really running, regardless of what it...
A small article about trauma in the journal JAMA last week has big implications about the business of hospital finances. In short, it shows that the U.S. spends more on trauma than any other group of diseases… and the implication is that in the future, financially healthy hospitals will need to be trauma centers.
The study looked at a random sample of 20% of all Medicare claims between 2008 – 2014 for patients over age 65 years. During this time, there were 11.8 million hospital admissions. The authors then looked at the ICD-9 diagnostic codes submitted to Medicare for these hospitalizations. Not surprisingly, heart failure accounted for the most hospitalizations at 692,031 (5.9% of total admissions) but trauma ICD-9 diagnoses were the second most common reason for hospitalization at 653,413 (5.6% of total admissions). Extrapolating this to the full 100% of Medicare admissions during that time, it works out to 3.46 million admissions for heart failure and 3.27 million admissions for trauma during the 7-year period.
Next, the study examined the total amount of Medicare payments for each of these conditions for the 90 days after the initial date of admission. Looking at the total cost of care for those 90 days, trauma was overwhelmingly the most expensive condition, costing $2.76 billion. Of that amount, the index hospitalization for trauma cost $1.11 billion, or 40% of the total cost.
This analysis was done using ICD-9 CPT codes. In 2015, the United States changed to ICD-10 codes but that is unlikely to have any impact on the implications of the study. The ICD-9 trauma codes are 800 – 959.9 and includes various fractures. Although the study’s authors did not break down the cost by specific CPT code, it is likely that geriatric fractures accounted for the largest portion of the trauma costs.
Patients with traumatic injuries are preferentially directed to hospitals that are designated trauma centers. Many hospitals undergo verification (accreditation) by the American College of Surgeons as level 1 (highest level of trauma care capability) to a level 3 center (lowest level of trauma care capability). Currently, there are 517 hospitals that are verified as level 1, 2, or 3 trauma hospitals by the American College of Surgeons. However, the requirements for designation of hospitals as being trauma centers is state-specific and not all states require American College of Surgeons verification. A study in 2003 reported that there were 1,154 trauma centers nationwide when including hospitals that were designated by their state as being a trauma hospital but did not undergo American College of Surgeons verification. In that study, 16.5% were level 1 hospitals, 22.8% level 2 hospitals, 21.7% level 3 hospitals, and 39.0% level 4/5 hospitals.
Trauma in Medicare patients is expensive because it involves older patients who frequently have medical co-morbidities and because a geriatric fracture is extremely expensive. For example, in the United States, there are more than 300,000 hip fracture hospitalizations each year with each fracture resulting in average direct medical costs of $51,000 per fracture. DRG 430 (fracture of hip and pelvis with major complications or comorbidity) results in hospital payments of $9,192 where as DRG 390 (hip and femur procedures with major complications or comorbidity) is $20,928, and DRG 379 (hip replacement with major complication or comorbidity) is $21,987. Following a hip fracture, there are the additional costs of rehabilitation, nursing homes, and medications.
As the U.S. population continues to age, the Medicare population will also age. The U.S. Census Bureau projects that the percentage of Americans over age 65 years old will increase from 15.2% of the total population currently to 23.5% of the current population in 2060. In 2035, for the first time in our country’s history, the percentage of the population over age 65 will exceed the population under age 18. It is projected that those over age 65 will increase from 49 million in 2016 to 78 million in 2035. This population growth has enormous implications for trauma care. By 2035, we will need more hospitals that are capable of managing trauma in the Medicare population. Since most of these trauma patients will likely be geriatric falls and fractures, hospitals will need a robust orthopedic surgery program, a strong physical therapy department, and close ties to post-hospital rehabilitation care. Under current U.S. healthcare financing, inpatient surgery admissions for hip and leg fractures are some of the most lucrative admissions for U.S. hospitals and are a major contribution to maintaining a positive financial margin at the end of the year. Based on the projected increase in the U.S. population over age 65, the total amount of Medicare payments to hospitals for trauma care, particularly geriatric falls and fractures, is going to increase significantly.
The bottom line is that in order to remain financially viable in the future, hospitals with more than 150 beds should be starting plans to become at least a level 3 trauma center today – that is where the money is going to be flowing in the future.
June 16, 2019