Renewed growth in hospital inpatient cost since 1998: Variation across metropolitan areas and leading clinical conditions

Objective: To use disaggregated data about metropolitan statistical areas (MSAs) and clinical conditions to better describe the variation in cost increases and explore some of the hypothesized influences. Study Design: The study uses the state inpatient databases from the Healthcare Cost and Utilization Project, containing all discharges from hospitals in 172 MSAs in 1998 and 2001. The discharge summary information was combined with standardized hospital accounting files, surveys of managed care plans, MSA demographics, and state data pertaining to caps on medical malpractice awards. Methods: The analysis used descriptive comparisons and multivariate regressions of admission rate and cost per case in 9 leading disease categories across the MSAs. The increase in hospital input prices and changes in severity of illness were controlled. Results and Conclusion: Metropolitan statistical areas with higher HMO market penetration continued to show lower admission rates, no less so in 2001 than in 1998. A cap on malpractice awards appeared to restrain admissions, but the net effect on hospital cost per adult eroded for those states with the most experience with award caps. Higher admission rates and increase in cost were found in several disease categories.