More Than One-Quarter of High-Cost Medicare Patients Have Persistent High Costs Over Three Years

Medicare high costs of outpatient care and medications

The Issue

It has been well documented that a small portion of Medicare patients — just 10 percent — account for more than half the program’s spending in any given year. But how many of these patients continue to incur high costs over time? Using three years of Medicare claims data (2012–2014), Commonwealth Fund–supported researchers sought to determine the share of patients with persistently high costs, as well as the key traits that differentiate them from those who incur high costs in only one or two years — or never.

What the Study Found

  • More than one-quarter (28%) of patients who had high costs in 2012 remained persistently high-cost over the subsequent two years, while 72 percent were transiently high-cost — for one or two years.
  • Persistently high-cost patients were younger (66.4 years) than either the transiently high-cost (73.3 years) or never high-cost (70.5 years) patients. They were also more likely to be members of racial and ethnic minorities, eligible for Medicaid in addition to Medicare, and qualify for Medicare because of end-stage renal disease.
  • On average, in the first year, persistently high-cost patients spent $64,434, compared with $45,560 for the transiently high-cost and $4,538 for the never high-cost.
  • Persistently high-cost patients spent more in all categories of spending. Notably, they spent more than four times as much as transiently high-cost patients did in outpatient settings ($16,148 v. $4,020) and on drugs ($15,467 v. $3,841).

The Big Picture

The 28 percent of Medicare beneficiaries with persistently high costs represent slightly less than 3 percent of the overall Medicare population but account for nearly 20 percent of Medicare spending for the three years studied. Only 5 percent of their total spending was related to potentially preventable hospitalizations, suggesting that it may be of little benefit to focus efforts on reducing such incidents.

The Bottom Line

Medicare patients who incur high costs over several years spend more on outpatient care and medications than those with lower costs. Targeting interventions on those two areas could help reduce overall spending.



Hospitals led healthcare industry hiring in September

Month after month this year, the ambulatory sector has led the pack when it comes to healthcare industry hiring. But hospitals managed to push ahead in September to take the top spot.

Hospitals added 12,000 jobs last month, 47% of total healthcare hiring, and easily beating out ambulatory’s 10,300 jobs. Healthcare overall added a healthy 25,700 jobs in September, 23% fewer than the 33,200 jobs added in August, but still well above July’s 16,700 new hires, according to the U.S. Bureau of Labor Statistics’ newest jobs report released Friday.

The September jobs report ticked the U.S. unemployment rate down to 3.7%, the lowest it’s been since 1969. A total of 134,000 new jobs were added to the U.S. economy last month. Healthcare hiring trailed that of professional and business services, which added 54,000 jobs, but beat out transportation and warehousing, which added 23,800 new jobs. The construction industry made 23,000 new hires.

Ambulatory sector hiring was weak in September compared with its robust showing for much of the year. Physicians’ offices added the most jobs, at 4,100—800 fewer than in August. Home health added 2,200 jobs, 72% fewer than the month before. Dental office hiring, which has been weak in recent months, shed 500 jobs.

Outpatient care centers added 1,000 jobs in September, while offices of other health practitioners added 2,000.

Nursing and residential care facilities added 3,400 jobs in September, 13% fewer than in August. Within that sector, other residential care facilities added 1,400 jobs, and community care facilities for the elderly made 1,100 new hires. Nursing care facilities, a typically weak hiring area this year, made 200 new hires in September. Residential mental health facilities added 700 jobs.

The case of the disappearing hospital beds

Click to access 2016chartbook.pdf

Healthcare is leaving the traditional four walls of hospitals. As patients, payers, and providers seek to reduce costs and improve quality, they are relying less on inpatient stays and more on outpatient services. A growing reliance on outpatient services could drive healthcare costs down as costly inpatient services are increasingly reserved for patients who truly need them.

Healthcare adds 33,000 jobs in September, though diagnostic labs shed staff

Healthcare businesses added 33,000 jobs in September, the U.S. Department of Labor’s Bureau of Labor Statistics announced on Friday, as the sector continues to be one of the biggest drivers of American jobs.

Overall, the U.S. economy added 156,000 jobs in the month, and the unemployment rate held at 5 percent.

Ambulatory services added 23,900 jobs in the month while hospitals added 6,900 positions. Only medical and diagnostic laboratories lost jobs in the month, shedding 400.

Overall, healthcare has added 445,000 jobs in the past 12 months. September’s gains more than double the 14,000 jobs the sector added in August.

Here’s the seasonally adjusted breakdown for the healthcare sector. All numbers are in thousands:

‘Bedless’ hospitals grow as industry moves toward outpatient care

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The changing nature of healthcare and patients’ desire for convenience have given rise to nontraditional care formats such as stand-alone emergency rooms and “micro-hospitals,” and now “bedless hospitals” are joining the push.

Such hospitals still have standard hospital features, including infusion suites, emergency rooms, helipads and operating areas, but no overnight space, according to STAT. For example, MetroHealth System recently opened a $48 million bedless facility in the Cleveland area. CEO Akram Boutros, M.D., said staff is expecting to serve around 3,000 patients during this first year.

“It reduces cost, and it reduces the risk of infection,” Boutros told the publication. “People go home to a less-risky environment, where they tend to get better faster.”

Sometimes Tiny Is Just The Right Size: ‘Microhospitals’ Filling Some ER Needs

Sometimes Tiny Is Just The Right Size: ‘Microhospitals’ Filling Some ER Needs

The two-story SCL-Health Community Hospital-Westminster opened outside Denver last fall. The microhospital offers emergency medical care, labor and delivery services, inpatient beds, two operating rooms, radiology services and an on-site laboratory. (Courtesy of Emerus and SCL Health)

Eyeing fast-growing urban and suburban markets where demand for health care services is outstripping supply, some health care systems are opening tiny, full-service hospitals with comprehensive emergency services but often fewer than a dozen inpatient beds.

These “microhospitals” provide residents quicker access to emergency care, and they may also offer outpatient surgery, primary care and other services. They are generally affiliated with larger health care systems, which can use the smaller facility to expand in an area without incurring the cost of a full-scale hospital. So far, they are being developed primarily in a few states — Texas, Colorado, Nevada and Arizona.

“The big opportunity for these is for health systems that want to establish a strong foothold in a really attractive market,” said Fred Bentley, a vice president at the Center for Payment & Delivery Innovation at Avalere Health. “If you’re an affluent consumer and you need services, they can fill a need.”

SCL Health has two microhospitals operating in the Denver metropolitan area and another two in the works. Microhospitals “are helping us deliver hospital services closer to home, and in a way that is more appropriately sized for the population compared to larger, more complex facilities,” said spokesman Brian Newsome.

The concept is appealing, and some people suggest they should be developed in rural or medically underserved areas where the need for services is great.


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