Length of stay has minimal impact on the cost of hospital admission1

Abstract

Background Hospital cost containment, cost reduction, and alternative care delivery systems continue to preoccupy health care providers, payers, employers, and policy makers throughout the United States. The universal metric for gauging the success of these efforts is hospital length of stay (LOS). Reducing the LOS purportedly yields large cost savings. The purpose of this study is to assess precisely how much hospitals save by shortening LOS. Study design We reviewed the cost-accounting records of all surviving patients (n = 12,365) discharged from our academic medical center during fiscal year 1998 with LOS of 4 days or more. Actual costs were identified through the University of Michigan cost-accounting system. Individual patient costs were broken out on a daily basis and then decomposed further into variable direct, fixed direct, and indirect categories. The population was analyzed by determining the incremental resource cost of the last full day of stay versus the total cost for the entire stay. The data were also stratified by LOS and by surgical costs. An analysis of all trauma patients was then performed on all patients discharged from the hospital's adult level I trauma center (n = 665). Costs were determined on specific days, including admission day, each ICU day, day of discharge from the ICU, and each of the last 2 days before the discharge day. Results The incremental costs incurred by patients on their last full day of hospital stay were $420 per day on average,…