Hospital costs by age, 2011

In 2011, the aggregate cost for all hospital stays was $387.3 billion—an average of $10,000 per stay. Figure 1 shows the distribution of aggregate hospital costs and stays by age for 2011, and Figure 2 displays the mean cost per hospital stay by age.

Figure 1

Distribution of aggregate hospital costs and stays by age, 2011. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Delivery, Organization, and Markets, Healthcare Cost and Utilization Project (HCUP), Nationwide Inpatient Sample (NIS), (more...)

Figure 2

Mean hospital cost per stay by age, 2011. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Delivery, Organization, and Markets, Healthcare Cost and Utilization Project (HCUP), Nationwide Inpatient Sample (NIS), 2011

Together, adults aged 45–64 years and 65–84 years accounted for nearly two-thirds of aggregate hospital costs and over half of hospital stays in 2011. Adults aged 45–64 years and 65–84 years also had the highest mean costs per stay ($12,500 and $12,600, respectively), which exceeded the average cost for all hospital stays.

Adults aged 18–44 years accounted for 18 percent of aggregate hospital costs and nearly one-quarter of hospital stays. The mean cost per stay for these patients ($7,400) was 35 percent lower than the average cost for all stays.

Infants younger than 1 year accounted for 5 percent of aggregate hospital costs and 11 percent of hospitalizations. The mean cost per stay for infants ($4,500) was less than half of the average for all stays. The mean cost per stay for children aged 1–17 years ($8,400) and adults aged 85 years and older ($9,900) was similar to the overall average cost per stay.

Hospital costs by expected primary payer, 2011

Figures 3 and 4 highlight the distribution of aggregate hospital costs and stays by payer and the mean hospital cost per stay by payer in 2011, respectively.

Figure 3

Distribution of aggregate hospital costs and stays by payer, 2011. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Delivery, Organization, and Markets, Healthcare Cost and Utilization Project (HCUP), Nationwide Inpatient Sample (NIS), (more...)

Figure 4

Mean hospital cost per stay by payer, 2011. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Delivery, Organization, and Markets, Healthcare Cost and Utilization Project (HCUP), Nationwide Inpatient Sample (NIS), 2011

Stays billed to Medicare and Medicaid together accounted for 63 percent of aggregate hospital costs and 60 percent of hospital stays in 2011. Forty-seven percent of aggregate costs were billed to Medicare, and the mean cost for stays billed to Medicare ($11,900) was nearly $2,000 higher than the overall average cost per stay. At $8,000, the mean cost per stay billed to Medicaid was $2,000 less than the average cost for all stays.

Private insurance was the expected primary payer for nearly one-third of aggregate hospital costs and hospital stays in 2011. The mean cost per stay billed to private insurance ($9,200) was similar to that for all stays. Stays billed to the uninsured and other payers each accounted for 4 percent of aggregate hospital costs. The mean cost per stay for stays billed to the uninsured ($8,300) was lower than the overall average cost, and the mean cost for stays billed to other payers ($10,700) was similar to that for all stays.

Hospital costs by diagnostic category, 2011

In 2011, 70 percent of aggregate hospital costs were attributable to seven major diagnostic categories (Figure 5). Circulatory conditions accounted for the largest share (18 percent) of hospital costs. Musculoskeletal conditions (14 percent) and respiratory conditions (11 percent) also accounted for large shares of hospital costs. Digestive conditions, nervous system conditions, infectious and parasitic diseases, and pregnancy and childbirth-related conditions each accounted for between 5 and 9 percent of aggregate costs.

Figure 5

Distribution of aggregate hospital costs by diagnostic category,* 2011. * Based on principal diagnosis, which was defined by major diagnostic category Source: Agency for Healthcare Research and Quality (AHRQ), Center for Delivery, Organization, and Markets, (more...)

Hospital costs by diagnosis, 2011

Table 1 shows the 20 specific principal diagnoses for stays with the highest aggregate hospital costs in 2011. Hospital costs for all diagnoses increased 63 percent between 1997 and 2011 from $237.2 billion to $387.3 billion, an annual increase of 3.6 percent. During this period, overall prices as measured by the Gross Domestic Product price index increased 34 percent, or 2.1 percent annually.⁵

Table 1

Aggregate costs for hospital stays by principal diagnosis, 1997 and 2011.

Stays with septicemia had the highest aggregate hospital costs in 2011 ($20.3 billion), which more than quadrupled since 1997 (an 11.5 percent annual increase). Costs for stays with septicemia were ranked 9^th in 1997, fell to 13^th in 2000, moved to 8^th in 2004, 3^rd by 2007, and have been ranked as the most expensive condition since 2008 (data for intermediate years not shown).

Cardiovascular conditions accounted for five of the specific diagnoses for stays with the highest aggregate costs: acute myocardial infarction, congestive heart failure, coronary atherosclerosis, acute cerebrovascular disease, and cardiac dysrhythmias. When combined, costs for stays with these five cardiovascular conditions accounted for 13 percent of aggregate costs in 2011. The aggregate cost for stays with coronary atherosclerosis decreased 34 percent between 1997 and 2011 (3 percent annually), but the cost per stay increased 52 percent during this time period.

The mean cost for stays with eight principal diagnoses was more than 50 percent higher than the overall mean cost for stays in 2011 ($10,000): septicemia ($18,600), osteoarthritis ($15,400), complication of device ($18,500), acute myocardial infarction ($18,900), spondylosis ($16,800), coronary atherosclerosis ($17,200), respiratory failure ($21,700), and hip fracture ($15,400).

The aggregate cost for stays with acute and unspecified renal failure more than quadrupled from $1.0 billion in 1997 to $4.7 billion in 2011 (an 11.4 percent average annual increase). During this period, the change in rank for costs for stays with renal failure was gradual: these costs ranked 54^th in 1997, 43^rd by 2002, jumped to 34^th in 2003, were 19^th by 2007, fell to 23^rd in 2010, and then rose to 20^th in 2011 (data for intermediate years not shown).

Hospital stays with complications of device and complications of surgical procedures or medical care as principal diagnoses accounted for $19.7 billion in aggregate costs. These principal diagnoses ranked as the 3^rd and 13^th most expensive conditions, and aggregate costs increased about 6 percent annually.

Cost factors accounting for change in hospital costs by diagnosis, 1997–2011

Figure 6 shows the average annual percentage change in aggregate hospital costs between 1997 and 2011 for the 20 principal diagnoses with the highest aggregate costs in 2011.

Figure 6

Average annual percentage change* and components of change in inflation-adjusted aggregate hospital costs by principal diagnosis, 1997–2011. * Bar segments depict the portion of change attributable to each of the factors listed in the key. The (more...)

Aggregate inflation-adjusted costs for all hospital stays increased 3.6 percent annually between 1997 and 2011. Across all diagnoses, intensity of services provided during the hospital stay (cost per stay) increased 2.8 percent annually, population grew 1.0 percent annually, and the number of stays per 10,000 population remained stable.

The hospitalization rate (stays per population) was the most important factor in cost growth for 4 of the 20 diagnoses that ranked among the most costly stays: acute and unspecified renal failure, septicemia, osteoarthritis, and adult respiratory failure.

Higher intensity of services (increased cost per stay) accounted for a large portion of growth in hospital costs for stays with eight principal diagnoses: back problems, both complication diagnoses, cardiac dysrhythmias, newborns, biliary tract disease, diabetes, and rehabilitation care.

For stays with a principal diagnosis of chronic obstructive pulmonary disease, growth in the hospitalization rate and intensity of services contributed equally to average annual aggregate cost growth.

For six diagnoses, growth in cost per stay was offset by a decline in the hospitalization rate. This included four of the five cardiovascular conditions that were among the most expensive stays in 2011 as well as hip fracture and pneumonia.

Average Annual Percentage Change

Average annual percentage change is calculated using the following formula:

In this Statistical Brief, 1997 and 2011 were the base years used to calculate the average annual percentage change in aggregate hospital costs, cost per stay, population, and stays per 10,000 population. Average annual percentage change was calculated over 14 years:

Diagnoses, ICD-9-CM Clinical Classifications Software (CCS), Diagnosis-Related Groups (DRGs), and Major Diagnostic Categories (MDCs)

The principal diagnosis is that condition established after study to be chiefly responsible for the patient's admission to the hospital. Secondary diagnoses are concomitant conditions that coexist at the time of admission or develop during the stay. All-listed diagnoses include the principal diagnosis plus these additional secondary conditions.

ICD-9-CM is the International Classification of Diseases, Ninth Revision, Clinical Modification, which assigns numeric codes to diagnoses. There are approximately 14,000 ICD-9-CM diagnosis codes.

CCS categorizes ICD-9-CM diagnoses into a manageable number of clinically meaningful categories.⁷ This “clinical grouper” makes it easier to quickly understand patterns of diagnoses. CCS categories identified as “Other” typically are not reported; these categories include miscellaneous, otherwise unclassifiable diagnoses that may be difficult to interpret as a group.

DRGs constitute a patient classification system that categorizes patients into groups that are clinically coherent and homogeneous with respect to resource use. DRGs group patients according to diagnosis, type of treatment (procedures), age, and other relevant criteria.

MDCs are broad groups of DRGs that relate to an organ or a system and not to an etiology (for example, MDC 06, Diseases and Disorders of the Digestive System). Each hospital stay has one DRG and one MDC assigned to it.

Types of hospitals included in HCUP

HCUP is based on data from community hospitals, which are defined as short-term, non-Federal, general, and other hospitals, excluding hospital units of other institutions (e.g., prisons). HCUP data include obstetrics and gynecology, otolaryngology, orthopedic, cancer, pediatric, public, and academic medical hospitals. Excluded are long-term care, rehabilitation, psychiatric, and alcoholism and chemical dependency hospitals. However, if a patient received long-term care, rehabilitation, or treatment for psychiatric or chemical dependency conditions in a community hospital, the discharge record for that stay will be included in the Nationwide Inpatient Sample (NIS).

Unit of analysis

The unit of analysis is the hospital discharge (i.e., the hospital stay), not a person or patient. This means that a person who is admitted to the hospital multiple times in one year will be counted each time as a separate “discharge” from the hospital.

Costs and charges

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 (CMS).⁸Costs will reflect the actual expenses incurred in the production of hospital services, such as wages, supplies, and utility costs; charges represent the amount a hospital billed for the case. For each hospital, a hospital-wide cost-to-charge ratio is used. Hospital charges reflect the amount the hospital billed for the entire hospital stay and do not include professional (physician) fees. For the purposes of this Statistical Brief, costs are reported to the nearest hundred.

Payer

Payer is the expected primary payer for the hospital stay. To make coding uniform across all HCUP data sources, payer combines detailed categories into general groups:

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Medicare: includes patients covered by fee-for-service and managed care Medicare

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Medicaid: includes patients covered by fee-for-service and managed care Medicaid

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Private Insurance: includes Blue Cross, commercial carriers, and private health maintenance organizations (HMOs) and preferred provider organizations (PPOs)

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Other: includes Worker's Compensation, TRICARE/CHAMPUS, CHAMPVA, Title V, and other government programs

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Uninsured: includes an insurance status of “self-pay” and “no charge.”

Encounters billed to the State Children's Health Insurance Program (SCHIP) may be classified as Medicaid, Private Insurance, or Other, depending on the structure of the State program. Because most State data do not identify SCHIP patients specifically, it is not possible to present this information separately.

When more than one payer is listed for a hospital discharge, the first-listed payer is used.