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National Healthcare Quality Report, 2013

Chapter 8. Efficiency

Health care cost increases continue to outpace the rise in wages, inflation, and economic growth. One approach to containing the growth of health care costs is to improve the efficiency of the health care delivery system. This approach would allow finite health care resources to be used in ways that best support high-quality care.

Recent work examining variations in Medicare spending and quality shows that higher cost providers do not necessarily provide higher quality care, illustrating the potential for improvement (IOM, 2013). Improving efficiency in the Nation's health care system is an important component of Department of Health and Human Services efforts to support a better health care system.

Measures

Part of the discussion about how to improve efficiency involves the question about how best to measure it. Varying perspectives and definitions of health care efficiency exist; although consensus has not yet emerged on what constitutes appropriate measurement of efficiency, the Agency for Healthcare Research and Quality (AHRQ) has supported development in this area.

This chapter has been largely shaped by a number of documents that have developed the field of health care efficiency measurement. One major contributor is an AHRQ-commissioned report by RAND Corporation. This report systematically reviewed efficiency measures, assessed their tracking potential, and provided a typology that emphasizes the multiple perspectives on health care efficiency (McGlynn, 2008).

This chapter of the National Healthcare Quality Report is organized around the concepts of overuse and misuse. As noted in the National Strategy for Quality Improvement in Health Care,i "Achieving optimal results every time requires an unyielding focus on eliminating patient harms from health care, reducing waste, and applying creativity and innovation to how care is delivered."

The measures this year are presented in the following layoutii:

  • Preventable emergency department visits:
    • Potentially avoidable emergency department visit rates.
    • Emergency treatment for mental illness or substance abuse.
  • Preventable hospitalizations:
    • Potentially avoidable hospitalization rates.
    • Potentially avoidable hospitalization costs.
  • Perforated appendixes.

Findings

Preventable Emergency Department Visits

Potentially Avoidable Emergency Department Visit Rates for Adults

Potentially preventable, high-cost encounters with the medical system occur not only in hospitals, but also in emergency departments (EDs). There were more than 125 million ED encounters in 2008 (AHRQ, 2008). ED crowding, boarding (i.e., holding patients until an inpatient bed is available), and ambulance diversion have become more prevalent and have given rise to increasing concerns about the quality of care delivered in EDs.

Some hospitalizations and ED encounters cannot be avoided, but appropriate ambulatory care can help keep some patients from having to visit an ED or from being hospitalized. Reducing potentially avoidable ED encounters, in particular, holds promise for reducing cost, improving quality, and enhancing efficiency.

For this analysis, the AHRQ Prevention Quality Indicators software was applied to the Healthcare Cost and Utilization Project (HCUP) Nationwide Emergency Department Sample. The overall potentially avoidable ED visit rate includes visits for acute conditions, such as dehydration and pneumonia, and chronic conditions, such as diabetes and congestive heart failure.

Figure 8.1. Potentially avoidable emergency department visit rates, by age and residence location, 2007-2010

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Key: MSA = metropolitan statistical area.
Source: Agency for Healthcare Research and Quality, Healthcare Cost and Utilization Project, Nationwide Emergency Department Sample, 2007-2010.
Denominator: Adults age 18 and over.
Note: For this measure, lower rates are better. Annual rates are adjusted for age and gender.

  • In 2010, the rate of ED visits for potentially avoidable conditions was 3,707 per 100,000 adults (Figure 8.1).
  • In all years, adults ages 45-64 and age 65 and over had higher rates of potentially avoidable ED visits compared with adults ages 18-44.
  • In all years, residents of small metropolitan, micropolitan, and noncore areas had higher potentially avoidable ED visit rates compared with residents of large metropolitan areas.

Also, in the National Healthcare Disparities Report (NHDR):

  • In all years, rates of potentially avoidable hospitalizations were higher among Blacks than Whites and lower among Asians and Pacific Islanders than Whites. Except in 2001 and 2008, rates were also higher among Hispanics than Whites.
  • In all years, rates of potentially avoidable hospitalizations were higher among residents of areas in the lowest and second income quartiles compared with residents of the highest income quartile.

Emergency Treatment for Mental Illness or Substance Abuse

When high-quality mental health care is not available in the community, patients with mental illness tend to rely on EDs for care (Alakeson, et al., 2010). EDs are often not staffed or equipped to provide optimal psychiatric care, and patients with mental illness often wait long periods before receiving appropriate care. ED staff observing patients waiting for psychiatric care cannot efficiently care for patients with other medical emergencies. This growing problem reflects a need for greater collaboration among hospital emergency departments and community mental health providers in the delivery of care to individuals who present to emergency departments and are also in need of mental health services.

This measure provides information on the quality of the local mental health care system and the degree to which EDs function as safety net providers for people with mental health and substance abuse problems.

Figure 8.2. Rate of emergency department visits with a principal diagnosis related to mental health and alcohol or substance abuse, per 100,000 population, by age and residence location, 2010

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Key: MSA = metropolitan statistical area.
Source: Agency for Healthcare Research and Quality, Healthcare Cost and Utilization Project, Nationwide Emergency Department Sample, 2010.
Denominator: U.S. population.
Note: For this measure, lower rates are better. Substance abuse includes visits for co-occurring substance abuse and mental health disorders.

  • In 2010, the rate of ED visits for mental health was 1,197 per 100,000 population, and the rate of ED visits for substance abuse (including co-occurring substance abuse and mental health disorders) was 510 per 100,000 population (Figure 8.2).
  • Children ages 0-17 had the lowest rate of ED visits for mental health compared with adults of all age groups, except for adults ages 65-84 (the difference is not statistically significant). Children ages 0-17 had the lowest rate compared with all other age groups for substance abuse.
  • Residents of medium metropolitan and micropolitan areas had higher rates of ED visits for mental health compared with residents of large fringe metropolitan areas (suburbs). Residents of large central metropolitan areas had higher rates of ED visits for substance abuse compared with residents of large fringe metropolitan areas.

Also, in the NHDR:

  • Compared with males, females had a higher rate of ED visits for mental health but a lower rate of ED visits for substance abuse.
  • Residents of the highest income quartile had the lowest rate of ED visits for mental health. For substance abuse, residents of the highest income quartile had a lower rate than residents of the first and second quartiles.

Preventable Hospitalizations

Potentially Avoidable Hospitalization Rates for Adults

Hospitalization is expensive. Preventing avoidable hospitalizations could improve the efficiency of health care delivery. To address potentially avoidable hospitalizations from the population perspective, data on ambulatory care-sensitive conditions are summarized here using the AHRQ Prevention Quality Indicators (PQIs).

Not all hospitalizations that the AHRQ PQIs track are preventable. But ambulatory care-sensitive conditions are those for which good outpatient care can prevent the need for hospitalization or for which early intervention can prevent complications or more severe disease.

The AHRQ PQIs track these conditions using hospital discharge data. Hospitalizations for acute conditions, such as dehydration or pneumonia, are distinguished from hospitalizations for chronic conditions, such as diabetes or congestive heart failure. Results presented this year apply a modified version 4.1 of the AHRQ Quality Indicators and are not comparable to results from previous years.

Figure 8.3. National trends in potentially avoidable hospitalization rates for adults, by type of hospitalization, 2000-2010

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Source: Agency for Healthcare Research and Quality (AHRQ), Healthcare Cost and Utilization Project, Nationwide Inpatient Sample, and AHRQ Quality Indicators, modified version 4.1, 2000-2010.
Denominator: Civilian noninstitutionalized adults age 18 and over.
Note: For this measure, lower rates are better. Annual rates are adjusted for age and gender.
2008 Overall Achievable Benchmark: 818.
2008 Achievable Benchmark: Acute: 387, Chronic: 394.

  • From 2000 to 2010, the overall rate of avoidable hospitalizations fell from 1,657 to 1,313 per 100,000 population (Figure 8.3). Declines in avoidable hospitalizations were observed for both acute and chronic conditions.
  • In 2008, the top 3 State achievable benchmark for all potentially avoidable hospitalizations was 818 per 100,000 population.iii The overall achievable benchmark could not be attained for 14 years.
  • The top 3 State achievable benchmark for acute potentially avoidable hospitalizations was 387 per 100,000 population.iv The acute achievable benchmark could not be attained for 12 years.
  • The top 3 State achievable benchmark for chronic potentially avoidable hospitalizations was 394 per 100,000 population.v The chronic achievable benchmark could not be attained for 18 years.

Also, in the NHDR:

  • In all years, rates of potentially avoidable hospitalizations were higher among Blacks than Whites and lower among Asians and Pacific Islanders than Whites.
  • In all years, rates of potentially avoidable hospitalizations were higher among residents of areas in the lowest and second income quartile compared with residents of the highest income quartile.

Potentially Avoidable Hospitalization Costs

The costs associated with potentially avoidable hospitalizations can be calculated to estimate how much money could theoretically be saved by eliminating such services. For this analysis, total hospital charges were converted to costs using HCUP cost-to-charge ratios based on hospital accounting reports from the Centers for Medicare & Medicaid Services. Therefore, cost estimates in this section refer to hospital costs for providing care but do not include either payers' costs or costs for physician care that are billed separately.

Figure 8.4. Total national costs associated with potentially avoidable hospitalizations, 2000-2010

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Source: Agency for Healthcare Research and Quality (AHRQ), Healthcare Cost and Utilization Project, Nationwide Inpatient Sample, and AHRQ Quality Indicators, modified version 4.1, 2000-2010.
Denominator: Civilian noninstitutionalized adults age 18 and over.
Note: For this measure, lower rates are better. Annual rates are adjusted for age and gender. Costs are adjusted for inflation and are represented in 2010 dollars.

  • From 2000 to 2003, total national hospital costs associated with potentially avoidable hospitalizationsvi increased from $25.4 billion to $28.7 billion. Since then, costs have been gradually declining, to $26.8 billion in 2010 (Figure 8.4).
  • These changes are largely attributable to avoidable hospitalizations for chronic conditions, with national hospital costs that increased from $14.7 billion to $16.6 billion between 2000 and 2003 and then declined to $15.9 billion in 2010.
  • Changes in avoidable hospitalizations for acute conditions also contributed, with national hospital costs that increased from $10.8 billion to $12.1 billion between 2000 and 2003 and then declined to $10.8 billion in 2010.

Perforated Appendixes

Perforation is a severe complication of appendicitis that allows intestinal contents to spill into the abdominal cavity. Patients with a perforated appendix have a worse prognosis and require longer recovery times after surgery than patients whose appendix does not rupture. More timely detection and treatment of appendicitis can reduce the percentage of appendicitis admissions in which rupture has occurred.

Figure 8.5. Perforated appendixes per 1,000 admissions for appendicitis, by age and sex, 2004-2010

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Source: Agency for Healthcare Research and Quality, Healthcare Cost and Utilization Project, Nationwide Inpatient Sample and AHRQ Quality Indicators, modified version 4.1, 2004-2010.
Note: For this measure, lower rates are better.

  • In 2010, the rate of perforated appendixes was higher for those age 65 and over and those ages 45-64 than for those ages 18-44 (520 and 400.9 per 1,000 admissions, respectively, compared with 208.7 per 1,000 admissions Figure 8.5).
  • Also in 2010, men had a higher rate of perforated appendixes than women (314 per 1,000 admissions compared with 252.1 per 1,000 admissions). Men are more likely to delay seeking treatment and may experience more complications than women.

Also, in the NHDR:

  • In 2011, for Indian Health Service (IHS) facilities, the rates of perforated appendixes for those ages 45-64 and age 65 and over were higher than for those ages 18-44.
  • Also in 2011, for IHS facilities, the rate of perforated appendixes for males was higher than for females.

References

Agency for Healthcare Research and Quality. Weighted national estimates from HCUP Nationwide Emergency Department Sample. Rockville, MD: AHRQ; 2008. Available at: http://hcupnet.ahrq.gov.

Alakeson V, Pande N, Ludwig M. A plan to reduce emergency room “boarding” of psychiatric patients. Health Aff (Millwood) 2010 Sep;29(9):1637-42.

Institute of Medicine. Interim report of the Committee on Geographic Variation in Health Care Spending and Promotion of High-Value Care: preliminary committee observations. Washington, DC: National Academies Press; 2013. Available at: http://iom.edu/Reports/2013/Geographic-Variation-in-Health-Care-Spending-and-Promotion-of-High-Care-Value-Interim-Report.aspx. Accessed September 13, 2013

McGlynn E. Identifying, categorizing, and evaluating health care efficiency measures. Rockville, MD: Agency for Healthcare Research and Quality; 2008. AHRQ Publication No. 08-0030. 


i Available at http://www.ahrq.gov/workingforquality/nqs/nqs2011annlrpt.htm.
ii Inappropriate medications measure is now in Chapter 4, Patient Safety.
iii The top 3 States that contributed to the overall achievable benchmark are Hawaii, Utah, and Washington.
iv The top 3 States that contributed to the acute achievable benchmark are Hawaii, Utah, and Washington.
v The top 3 States that contributed to the chronic achievable benchmark are Utah, Vermont, and Washington.
vi Adjusted for inflation. The inflation adjustment was done using the gross domestic product implicit price deflator.


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Page last reviewed May 2014
Page originally created May 2014
Internet Citation: Chapter 8. Efficiency. Content last reviewed May 2014. Agency for Healthcare Research and Quality, Rockville, MD. https://archive.ahrq.gov/research/findings/nhqrdr/nhqr13/chap8.html

 

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