Costly Hospital

People with multiple chronic conditions account for a large and disproportionate share of total health care costs. One aspect of the high cost for such patients is a relatively high number of hospital admissions per year. This study aims to clarify how the rate of hospital readmissions and hospital cost per person in a year depend on a patient’s number of different chronic conditions (‘‘complexity’’), severity of illness, principal diagnosis at discharge, payer group, and other variables. We use a database of all hospital discharges for adults in six states. The number of different chronic conditions has a smoothly increasing effect on readmissions and cost per year, and there are notable differences by payer group. We offer illustrations of the potential savings from reducing total inpatient cost and readmissions in narrowly targeted populations with the most complex problems. The study’s methods and descriptive data potentially could be useful for health plans and their sponsors (employers, government) when they design strategies to address the high cost of complex chronic illness. The Institute of Medicine (IOM) has recog