At a time when managed-care plans are looking for ways to right their financial ship, an actuarial and consulting firm that works for the industry has come to the rescue with a report criticizing 54% of all inpatient hospital days as unneeded.
The report could become justification for cutbacks in hospital coverage.
Seattle-based Milliman & Robertson, which released the report last week, also publishes and sells guidelines on optimal hospital stays for a host of illnesses and surgeries. The guidelines are used by many managed-care companies to approve procedures and set coverage. Milliman produced the report on its own.
According to the new report, 54% of all inpatient hospital days last year were medically unnecessary for commercially insured patients under the age of 65. For Medicare beneficiaries, that figure was 53%.
Those figures are based on data collected by the firm in developing its length-of-stay guidelines, which have been in use since 1994.
Last year there were more medically unnecessary days than the previous three years because the guidelines have recommended progressively shorter hospital stays, Milliman said.
The growth in unnecessary days occurred even though average lengths of stay have been shrinking steadily at hospitals. According to the latest available data from the American Hospital Association, acute-care hospitals recorded an average length of stay of 6.2 days in 1996, down from 6.7 days in 1994.
The Milliman report identified the regions with the most unnecessary days-per-thousand for commercially insured patients as New York, at 72%; New Orleans, 68%; and Philadelphia and Newark, N.J., at 67% each.
Portland, Ore., performed best with a rate of unnecessary days of 35%.
David Axene, a partner at Milliman, said that without significant analysis Milliman's data won't identify why some regions have higher unnecessary inpatient utilization. But he said Milliman has found significant regional variations in how physicians practice and how hospitals treat similar patients. "In most areas, a significant portion of providers were doing their business the way they want to -- without rhyme or reason," Axene said.
Axene said that federal and state laws mandating longer hospital stays for certain conditions have not dramatically affected inpatient utilization, although some increases have been seen.
Steve Rutledge, president of the Oregon Association of Hospitals and Health Systems, said the Portland area's low rate of unnecessary days might reflect its high HMO penetration, which stands at 55% to 60% including Medicare beneficiaries. HMOs typically employ utilization review and other tools to reduce inpatient stays.
In addition, "unlike some parts of the country where the role of the HMO is to beat the heck out of hospitals, we see a lot more partnerships" between plans and providers, Rutledge said. The collaborative environment is producing lower lengths of stay and more efficient care, he said.
Another factor is the very low Medicare reimbursement rate for the Portland region, which forces providers "to focus on utilization if you're going to live within that cap," Rutledge said.