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Department of Pathology and Laboratory Medicine, University of Pennsylvania, 3400 Spruce St., Philadelphia, PA 19104-4283.
a Author for correspondence. Fax 215-349-5090; e-mail donaldyo{at}mail.med.upenn.edu
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Abstract |
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 Top Abstract IntroductionMaterials and MethodsResults2DiscussionReferences |
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Methods: We used a database developed by the University HealthSystems Consortium containing >1 million patients in 60 University Hospitals with diseases included in 486 diagnosis-related groups (DRGs). Laboratory costs included in the database comprised those associated with testing in the clinical laboratory together with those incurred in point-of-care testing and anatomic pathology but not those involving blood products and their transfusion.
Results: The mean laboratory costs to manage surgical patients were greater than those to manage medical patients in 19 of the 25 major diagnostic categories. The median laboratory costs for patients with liver transplants exceeded $8000, and the laboratory costs to support other organ transplants were among the highest. The highest proportion of total costs attributable to the laboratory was 18.3% for acute leukemia and kidney and urinary tract signs and symptoms, both in children. Laboratory costs were <1.0% of the total costs for only 15 DRGs. The highest median daily laboratory cost, $416, was attributable to liver transplant patients. Several conditions had median laboratory costs less than $30 per day, in spite of lengths of stay that exceeded 10 days in some cases.
Conclusions: Although laboratory costs generally average 6% of the total costs for surgical conditions and 9% of the total costs for medical conditions, there is considerable variability. In general, laboratory costs were relatively poorly correlated with total costs. However, observation of high daily laboratory costs for many DRGs suggests that reducing length of stay would reduce both laboratory and total costs.
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Introduction |
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TopAbstractIntroductionMaterials and MethodsResults2DiscussionReferences |
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Reducing costs attributable to the laboratory would appear to be feasible both by curbing the number of tests performed and by reducing the costs of individual tests. Whereas laboratorians can influence the costs within the laboratory, few have tried to convince their clinical colleagues to change their ordering patterns. The most difficult challenge for both laboratorians and clinicians is to identify and eliminate, in advance, those tests that are not likely to have any direct influence on the diagnosis and/or management of the patient.
In spite of the debate about the costs of healthcare and the focus of institutions on reducing the cost of laboratory services, there have been no studies that have put into perspective the actual contribution of laboratory costs to the overall costs of managing patients. To do this, we decided to take a fresh approach by examining the costs of laboratory testing as it applies to specific diseases. We were fortunate to have available the 1995 University HealthSystems Consortium (UHC) UHC Clinical Data Base, which includes the costs of diseases in 60 participating University hospitals of the UHC. The database provided a breakdown by disease of each of the major sources of costs by hospital cost centers, allowing a comparison of the major source components of costs. Such an approach enables laboratory costs to be put in the perspective of total costs and the costs attributable to other services involved in the management of patients. To ensure comparability of costs across the country, UHC applies a labor cost adjustment to take into account differences in geographic wage indices.
The database was developed before most hospitals implemented clinical or critical pathways for many of their high-volume diseases and thus largely represents unmanaged clinical practice, although the data were gathered more than 10 years after the implementation of DRGs.
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Materials and Methods |
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TopAbstractIntroductionMaterials and MethodsResults2DiscussionReferences |
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and include not only the traditional clinical laboratory
services but also anatomic pathology services. They do not include the
costs attributable to the blood bank or transfusion medicine service,
nor do they include charges for physician services.
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Results2 |
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TopAbstractIntroductionMaterials and MethodsResults2DiscussionReferences |
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. Sixteen of the 22 DRGs involved surgical conditions, and 6
involved medical conditions, including the nonspecific "other factors
influencing health status". The data show that low usage is not
related exclusively to the short length of stay of patients with these
DRGs. Nor could the low usage be related to an nonrepresentative, small
number of patients with these conditions. For 8 of the 22 DRGs, there
were >1000 patients. For 2 DRGs, the mean length of stay exceeded 3.0
days, and for 10 DRGs, the mean length of stay exceeded 2.0 days. For
several of the conditions listed, the need for admission of the
patients was not apparent because patients with these conditions are
typically treated as outpatients.
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total laboratory costs
The range of laboratory costs for the DRGs is listed in Table 3
. Only 34 conditions had laboratory costs greater than $1000.
Four had median costs greater than $5000. Laboratory costs were greater
than $300 for 224 conditions and greater than $100 for 424 of the 486
DRGs. The highest laboratory costs were typically incurred by patients
with surgical conditions. For six surgical conditions and one medical
DRG, laboratory costs were greater than $3000. Overall, approximately
equal numbers of medical and surgical DRGs had laboratory costs above
$300, although more surgical than medical conditions had laboratory
costs less than $100.
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The 16 conditions with total median laboratory costs greater than $1500
are illustrated in Table 4
. The four conditions with the highest median laboratory costs
are related to organ transplantation. At $2086, the laboratory costs
for kidney transplantation, the other transplant DRG, were the ninth
highest. The laboratory costs for liver transplantation, $8329, were
substantially greater, by almost $1500, than for any other disease. The
median laboratory costs for liver transplants were more than $6000
higher than those for kidney transplants. Only 4 of the 16 diseases
with the highest laboratory costs were medical conditions. Two of these
were for acute leukemia, and the others were for malignant breast
disorders with complications and/or comorbidity, and for respiratory
system diagnosis with ventilator support. In spite of the high median
total laboratory costs, these costs often comprised only a small
portion of total costs, e.g., 4.9% of the total costs for kidney
transplants, 5.1% of the total costs for extreme immaturity or
respiratory distress in neonates, and 5.3% of the total costs for
cardiac valve procedures with cardiac catheterization.
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DRGs were grouped into major diagnostic categories (MDCs) based
primarily on organ systems. The number of DRGs within any MDC
may be quite different, and the breakdown by medical and surgical
conditions may also be quite different. For the 24 MDCs that had both
medical and surgical DRGs, when the median laboratory costs were
averaged for all the DRGs within a MDC, they were higher for 20
surgical MDCs and higher for 4 medical MDCs, as illustrated in Table 5
. When the laboratory costs for the medical MDCs were higher,
the conditions involved diseases or disorders of the eye (MDC 2); ear,
nose, and throat (MDC 3); skin, cutaneous tissue, and breast (MDC 9);
and myeloproliferative disorders or poorly differentiated malignancies
(MDC 17). The laboratory costs for the MDCs involving diseases of the
eye and ear, nose, and throat were small for both medical and surgical
conditions. The average of the median laboratory costs for the two
surgical conditions in MDC 15, involving normal newborns and other
conditions arising in the neonatal period, was seven times that for the
five medical conditions. The average of the median laboratory costs for
the surgical DRGs in MDC 16 (diseases and disorders of the blood and
blood-forming organs and immunity), was four times that of the medical
DRGs in the same MDC.
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The largest dollar difference between the averages of the median laboratory costs for surgical and medical conditions was $1665 for MDC 24, trauma. The difference was largely attributable to the low cost ($516) for the single medical DRG, other multiple significant trauma, because the median laboratory costs of each of the three surgical trauma DRGs exceeded this. The difference of $1245 for MDC 4 (diseases or disorders of the respiratory system) was considerably affected by the high median laboratory cost ($5260) for lung transplants, so that the average of the median laboratory costs for the 5 surgical DRGs was four times that of the 26 medical DRGs.
No medical MDCs had average median laboratory costs greater than $1000, although that of the median laboratory costs of eight surgical MDCs exceeded this, and the mean of the median laboratory costs for the three trauma DRGs exceeded $2000. Within MDCs, the average of the median laboratory costs for the medical DRGs was $401 compared with $740 for the surgical DRGs. The lowest average median laboratory cost for DRGs within a medical DRG was $146 for diseases of the eye (MDC 2). For surgical DRGs, it was $53 for the same MDC. The difference in the average of the median laboratory costs of $1163 between medical and surgical DRGs within MDC 16, diseases of the blood, blood-forming organs and immunity system, was greatly influenced by the high median cost ($5928) for bone marrow transplants. Within a MDC, when the average of the median laboratory costs was higher for the medical DRGs than the surgical DRGs, the biggest difference was $145 for MDC 9, diseases of the skin, subcutaneous tissues, and breast.
laboratory costs as a proportion of total costs
Overall, the proportion of total costs attributable to the
laboratory was greater for medical conditions (9%) than for surgical
conditions (6%) (2). The median laboratory costs of 15 DRGs
constituted <1.0% of the total costs (Table 6
). Of these DRGs with least laboratory utilization, five were in
children, six involved minor orthopedic surgery, and four involved
ophthalmologic conditions. The median laboratory costs for cleft lip
and palate repair and for urethral stricture in children were zero.
Thus, a realistic expression of laboratory costs as a proportion of
total costs was not feasible for these conditions. For knee procedures
without complications and for arthroscopy, laboratory costs comprised
only 0.1% and 0.3% of the total costs, respectively. In contrast, 14
conditions had median laboratory costs >16.0% of the total costs. The
conditions were heterogeneous, affecting several different organ
systems and affecting both children and adults, but all of these
conditions were classified as medical. Median laboratory costs were
18.3% of total median costs for both kidney and urinary tract signs
and symptoms in children and acute leukemia without an operative
procedure in children. The laboratory costs for uncomplicated
atherosclerosis and diseases of the liver except malignancy, cirrhosis,
or alcoholic hepatitis with complications and/or comorbidities
comprised 17.9% of the total costs. This group of conditions with
proportionally high laboratory costs included several conditions
without well-defined diagnoses, e.g., kidney and urinary tract signs
and symptoms, viral illness, signs and symptoms with complications
and/or comorbidities, and fever of unknown origin. The
disproportionately high laboratory costs were presumably incurred in
trying to establish a definitive diagnosis.
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As for the overall cost data, laboratory costs as a proportion of total costs are typically higher for individual medical conditions than for surgical conditions. The 16 highest proportions of mean laboratory costs to total mean costs for medical conditions were 18.5–15.4% compared with 12.7–10.5% for surgical conditions. Of the 261 diseases or conditions classified as medical, mean laboratory costs were >9.5% of total costs in 109 (41.8%) and >9.0% in 120 (46.0%). Of the surgical conditions, 10 of 224 (4.5%) had mean laboratory costs >9.5% of the total costs and 15 (6.7%) had laboratory costs >9.0% of the total costs. For the medical conditions, the highest mean proportions were history of malignancy without endoscopy (18.5%) and kidney and urinary tract signs and symptoms in children (18.0%).
The highest mean proportion of costs attributable to the laboratory for surgical conditions was 12.7% for hepatic diagnostic procedure for non-malignancy and HIV with extensive operating room procedure. Much of the high laboratory cost for the latter was presumably attributable to the underlying HIV infection because all of the medical conditions involving HIV infections had high laboratory costs. Thus, the laboratory costs for HIV with major related condition, and HIV with or without other related conditions comprised 13.2% and 15.0% of the total costs, respectively. For surgical conditions, the next highest proportion, 12.0%, was also for a disease that is classified primarily as medical, lymphoma or non-acute leukemia but with other operating room procedure with complications or comorbidity. Thus the high laboratory costs of the three surgical conditions with the highest proportional laboratory use are largely attributable to the underlying medical condition. This is also true for several of the other surgical conditions ranked in the top 16.
The mean length of stay for the surgical conditions with highest mean laboratory costs was generally considerably longer than for the medical conditions with proportionally highest laboratory costs. The proportion of total costs that laboratory costs represent were weakly positively correlated with length of stay (r2 = 0.7839 for medical conditions and 0.7757 for surgical conditions). Nevertheless, there was considerable variability among different conditions. For medical conditions, those with the highest proportion of the total costs (18.0%) attributable to the laboratory were kidney and urinary tract signs and symptoms, with a mean length of stay of only 1.7 days, and acute leukemia in children, with a mean length of stay of 9.5 days. Three of the conditions with laboratory costs comprising the highest proportion of total costs involved diseases of the liver.
laboratory costs per day
The diseases with median laboratory costs per day greater than
$250 are listed in Table 7
. The highest median laboratory cost, $416 per day, was for
liver transplants and comprised 10.7% of the total costs. These high
costs are probably attributable to surgical pathological biopsies as
well as frequent comprehensive clinical laboratory testing. The only
other condition with median laboratory costs greater than $400 per day
was DRG 401, lymphoma or nonacute leukemia with an operative procedure
and complications and/or comorbidity. The median daily laboratory costs
for lung and heart transplants, among the four conditions with the
highest total laboratory costs, were $329 and $274, respectively. Many
of the "laboratory" costs for these conditions are attributable to
anatomic pathology services such as biopsies. The laboratory cost of
$291 per day incurred in the evaluation of a possible myocardial
infarction, i.e., patients with chest pain (DRG 143), was among the
highest median daily laboratory costs.
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The lowest daily mean laboratory costs were incurred for alcohol and/or drug dependence with rehabilitation therapy and childhood mental disorders, $12 and $14, respectively. The mean lengths of stay for these conditions were 16.2 and 13.7 days, respectively. Other diseases with long lengths of stay and low daily mean laboratory costs were rehabilitation ($26 for each of 16.3 days), psychoses ($27 for each of 10.5 days), and other diagnoses of mental disorders ($28 per day for 11.6 days). There often was very low utilization of tests among patients with diseases associated with short lengths of stay. Thus, for children with urethral stricture laboratory costs were $23 for the 1.0-day mean length of stay, $27 per day for the mean 1.7 days for patients with cleft lip and palate repair, $30 per day for the mean 1.7 days for normal newborns, and $31 per day for the 2.1-day mean length of stay for managing knee procedures without complications.
ratio of mean to median laboratory costs
The ratio of mean to median laboratory costs provides a simple way
of identifying the diseases with greatest variability in laboratory
utilization. The variability may reflect both differences in complexity
that would warrant different utilization and increased utilization
without underlying justification in some patients. The mean laboratory
costs were higher than the median for every DRG. Those conditions in
which the ratio exceeded 4.0 are listed in Table 8
. With the exception of DRG 456, burns transferred to another
acute care facility, all of the conditions were associated with very
low median laboratory costs. The mean-to-median ratio was >3.0 for 22
DRGs and >2.0 for 78 DRGs.
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accommodation costs
Accommodation costs comprise all those associated with daily
nursing and "hotel services" for patients. The correlation between
laboratory costs and accommodation costs was
r2 = 0.7993 for medical conditions and
r2 = 0.8266 for surgical conditions.
The ratios of median accommodation costs to median laboratory costs
varied from 1.7 to 116.2. The lowest ratios were 1.7, for liver
transplants, and 2.0, for both subtotal mastectomy for
malignancy without complications and/or comorbidities and kidney and
urinary tract symptoms in children. The highest ratios were for knee
procedures without complications (116.2) and hyphema (105.2). These
were approximately double those for the next highest conditions,
arthroscopy (55.4) and allergic reactions in children (54.6). The ratio
was largely governed by the amount of laboratory testing performed. All
of the conditions associated with high ratios had very low laboratory
costs. Cleft lip and palate repair had no identifiable median
laboratory costs; therefore, it was impossible to calculate a ratio for
this condition. The lowest ratios were typically associated with high
laboratory utilization.
association with intensive care unit
Of 33 conditions with identifiable median intensive care unit
(ICU) costs, 26 had ICU costs greater than laboratory costs, and 7 had
laboratory costs greater than ICU costs. Four of the five conditions
with the highest ratio of ICU to laboratory costs were related to
burns. The highest ratio, 8.83, was for nonextensive burns with skin
grafts, for which median ICU and laboratory costs were $3593 and $407,
respectively. The second highest ratio, 4.56, was for extensive burns
with an operative procedure. For this condition, the costs were
substantially higher for both the ICU, $19 561, and laboratory, $4294.
total laboratory costs in reporting uhc hospitals in 1995
The total laboratory cost to support liver transplants in the 60
university hospitals was greater than the laboratory cost for any other
disease or procedure (Table 9
). Table 9
includes the 26 DRGs for which the laboratory costs
for all patients exceeded $5.0 million. It is readily apparent that the
high total costs for some DRGs are attributable to high laboratory
utilization (despite relatively small numbers of patients), as for
liver, bone marrow, and kidney transplants. The large number of
patients with relatively low laboratory utilization, e.g., percutaneous
cardiovascular procedures, vaginal delivery without complicating
diagnoses, chemotherapy without leukemia as secondary diagnosis, and
psychoses, accounts for the high total costs for other conditions.
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Discussion |
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TopAbstractIntroductionMaterials and MethodsResults2DiscussionReferences |
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The data confirm the widespread use of laboratory tests for the management of hospital patients, even for relatively simple conditions. For 295 different conditions, >95% of all patients had at least one test. For all diseases with >100 patients in the database, only cleft lip and palate had a laboratory utilization rate of <50% of patients receiving laboratory tests. For several conditions involving minor surgery, such as arthroscopy or ophthalmologic surgery, only 50–60% of the patients had any laboratory procedures. Low laboratory utilization appears to be more a function of a patient’s disease than of length of stay and was often associated with minor surgery. Nationally, laboratory utilization continues to increase. McLendon and Doerpinghaus (3) attributed the growth of laboratory testing in hospital practice to the availability of new tests, implementation of new clinical programs, increased number of beds, or the upgrading of beds to intensive care beds in intensive care units.
Laboratory costs can be both substantial and a large proportion of total costs, >15% of total costs for some conditions. The diseases with the four highest laboratory costs were all associated with organ transplantation. Laboratory tests are critical for the management of such patients. This high utilization emphasizes the need to ensure that adequate laboratory resources are available when such complicated programs are implemented within a hospital. The laboratory costs of kidney transplants are small in comparison with those of the newer organ transplant programs. In general, laboratory costs for medical conditions are higher as a portion of total costs than are the corresponding costs for surgical conditions. The medical, as opposed to surgical, diseases with highest laboratory costs straddle many organ systems but frequently involve the liver or kidney. The highest proportion of costs attributable to the laboratory was 15.4–18.5% of the total for 16 medical conditions. The proportional costs were not associated with mean length of stay because this varied from 1.70 to 9.50 days for this group of conditions.
For the 227 surgical DRGs included in the database, as for medical conditions, the proportion of total costs represented by laboratory services was not associated with length of stay. Thus, for one DRG (193), laboratory costs comprised 11.4% of the total over an average stay of 24.6 days, whereas the laboratory costs for another DRG were 11.7% of total costs but were incurred over an average of only 1.5 days. For 13 surgical conditions, laboratory costs were <1.0% of the total, whereas only 3 conditions classified as medical (cleft lip and palate repair, hyphema, and allergic reactions in children) had costs <1.0% of total costs. Mozes et al. (4) have concluded that the number of routine laboratory tests correlate with length of stay predictions better than DRG classes. We have shown that laboratory costs are the best predictor of total costs for hospitalized surgical patients (2).
The ranking of diseases by laboratory costs per day is quite different from that by total costs, although the organ transplants remain among the most costly conditions. A review of the practice in our own hospital suggests that for many diseases not managed via clinical pathways, laboratory utilization does not vary markedly from day to day because of ingrained habitual ordering patterns. The data presented here would suggest that for certain diseases, reducing the length of stay could materially reduce costs attributable to the laboratory as well as reducing accommodation expenses.
The UHC data identify both median and mean costs. For many diseases, the mean laboratory costs greatly exceeded median costs. Mean costs are much more affected than median costs by a few outlying patients within a DRG. This is most apparent when laboratory costs are low.
There was a good overall correlation between laboratory costs and total costs for medical conditions (r2 = 0.8841) and even better between laboratory costs and total costs for surgical conditions (r2 = 0.9578) (2). Indeed, the correlation between laboratory costs and total costs for surgical conditions was stronger than that between total costs and the costs of any other examined component, although the correlation between relative weight, which reflects the complexity of the condition, and total costs (r2 = 0.9462) was only slightly weaker. For medical conditions, the correlation between accommodation costs and total costs (r2 = 0.9231) was the only correlation better than that between the laboratory and total costs.
Often laboratory costs are viewed similarly with accommodation costs. Many laboratorians have suggested that more laboratory testing might lead to earlier diagnosis and therefore a reduced length of stay. Our data suggest that high ratios of accommodation to laboratory costs are largely attributable to low laboratory costs, and that low ratios are associated with extensive laboratory use. For all diseases, accommodation costs exceeded laboratory costs, but because of the high laboratory utilization for liver transplants, laboratory costs were more than one-half of the accommodation costs. For no other condition did laboratory costs approach this value.
It is interesting to look at total laboratory costs incurred in managing the patients in the 60 participating university hospitals. The greatest costs for a single condition were incurred in the management of liver transplant patients, although there were only 1548 patients hospitalized with this condition. A comparison of the total laboratory costs with the number of patients with different diseases highlights the differences in laboratory costs for the diseases. The laboratory costs of the small number of conditions involving organ transplantation were large in comparison with the lower costs of the much larger number of patients with less complicated conditions. Most of the conditions with high laboratory costs were surgical, and they frequently involved the heart and circulatory system.
There is a widespread belief that more laboratory tests are ordered than are necessary for good patient management. Schroeder et al. (5) found no relationship between the laboratory utilization and the quality of care. In a review of the literature, Axt-Adam et al. (6) concluded that excess test ordering ranged from 20% to 95%, depending on the criteria used. More recently, Bates et al. (7) have concluded that 8.6% of 10 common diagnostic tests appear redundant and that too-early repetition of such tests fails to provide useful clinical information. Today, patients are rarely admitted to hospital for diagnosis but rather are admitted with established diagnoses for specific treatment. Thus, the tests performed are to monitor the patient’s response to treatment or to detect side effects of treatment. Such tests are typically low cost, but excessive use leads to substantial expense (8).
This study documents the existing usage of laboratory testing in many large academic medical centers. It shows considerable variability in laboratory utilization for different diseases, but it also shows that laboratory costs typically are only a small part of the total costs to manage patients. Although the data for this study were obtained more than 10 years after the implementation of DRGs, they were obtained before many hospitals implemented clinical, or critical, pathways with their focus on optimizing resource utilization. Such pathways target not only laboratory utilization, but all hospital activities, including surgical and operating room procedures, in managing patients with specific diseases. The data were also obtained before managed care was as prevalent as it is now. It will be interesting to repeat this study in the future to determine the impact of increased managed care and the pathway approach on both absolute and proportional use of resources.
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Acknowledgments |
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Footnotes |
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2 The following additional Tables are included as a data supplement with this article at Clinical Chemistry Online (www.clinchem.org/content/vol46/issue7/): Supplemental Tables: S1. DRGs with highest median laboratory costs as proportion of total costs. S2. Medical (A) and surgical (B) DRGs with highest mean laboratory costs as percentage of total. S3. DRGs with lowest mean laboratory costs per patient day. S4. DRGs with highest (A) and lowest (B) ratios of accommodation to laboratory costs. S5. DRG ranking by median laboratory costs. S6. DRGS with highest (A) and lowest (B) ratios of median laboratory costs to relative weights.
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References |
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TopAbstractIntroductionMaterials and MethodsResults2DiscussionReferences |
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The following articles in journals at HighWire Press have cited this article:
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  A. S. Pickard, L.-A. Topfer, and D. H. Feeny A Structured Review of Studies on Health-Related Quality of Life and Economic Evaluation in Pediatric Acute Lymphoblastic Leukemia J Natl Cancer Inst Monographs, October 1, 2004; 2004(33): 102 - 125. [Abstract] [Full Text] [PDF]
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