Media Room

For Immediate Release

Truven Health Analytics Study: Facility Costs, Length of Stay Drive Significant Geographic Variation in Commercial Bundled Spend for Joint Replacements

Facility costs vary up to $1,600 per additional day’s stay from East North Central to Pacific region

Las Vegas, NV (HIMSS Booth #3021), Mar. 02, 2016 — A new study by Truven Health Analytics™ found that the primary drivers of cost variation for major lower joint replacement are tied to hospital cost and length of stay. For facility costs, the study attributes up to $1, 944 per additional day in total cost variation. That variation is independent of professional costs. The study builds on previous research that found more than $10, 000 in commercial bundled spend variation for the same surgeries based on geography.

Truven Health conducted this research series examining the spend for knee and hip replacements ahead of the April 1, 2016, implementation of the Centers for Medicare & Medicaid Services’ (CMS) Comprehensive Care for Joint Replacement (CJR) Model. The CJR model is a directive to encourage hospitals, physicians, and post-acute care providers to improve care coordination and lower episode spend for major lower joint replacements — from initial hospitalization through 90 days post-surgery. Truven Health performed the study to help clients make better decisions as they begin to adopt this model.

Whereas the first study identified the scope of spend variation for lower joint replacement, part two in the series sought to pinpoint the drivers of that variation. It found the key drivers of this variation are facility cost and patient length of stay, primarily in post-acute care, with significantly larger costs associated with rehabilitation facilities in different sections of the country, as opposed to skilled nursing facilities and home health services. Key findings include:

* Significant Variation in Facility Costs: The increase in facility cost only (removing professional cost) for each additional day a patient is hospitalized after the procedure varies from $313 per day in the East North Central region to $1, 944 per day in the Pacific region, a difference of more than $1, 600.

* Costs Vary Widely in Post-Acute Settings: On average, the cost to treat a patient at a rehab facility was $10, 600 per patient, versus $5, 300 per patient at a skilled nursing facility, and $1, 300 using home health services. And, the cost for rehab facilities varied widely by region, with the cost per patient in the Pacific totaling close to $22, 500 compared with roughly $7, 000 per patient in New England.

* Lower Readmission Rates Limit Spending: The cost per bundle for readmissions varied from $538 in the East South Central to $918 in the West South Central division. This lower cost in the East South Central resulted from both a low rate of readmission (3.3 percent) and a low cost per discharge ($16, 340).

“As providers and payers begin to consider bundled payment programs for these procedures, it is increasingly important to understand the cost implications of each additional inpatient day, as well as post-acute care and readmissions, ” said Bob Kelley, senior research fellow, advanced analytics, at Truven Health Analytics and lead researcher on the study. “Once claims-based, actual patterns are recognized and understood, guidelines and standard best practices can be put in place to guide discharge planning and post-acute care based on patient risk for readmission and other factors contributing to a successful recovery. In fact, we look forward to accessing more clinical data and predictive analytics to help improve the management and execution of bundled payments.”

For this analysis, Truven Health researchers used claims data for 2012 and 2013 from the Truven Health MarketScan® Commercial Database. They selected only patients treated for total knee and total hip replacement who were age 45 to 64 at the time of the procedure. The study based episode length on the CMS final rule of 90 days post-hospital discharge. The study sample included a total of 84, 648 individual cases.

For more information, visit http://truvenhealth.com/issues/bundled-payments or visit Truven Health at Booth #3021 at HIMSS16 in Las Vegas, Nevada, February 29-March 4, 2016.

About Truven Health Analytics, part of the IBM Watson Health Business

Truven Health Analytics®, part of the IBM Watson Health™ business, provides market-leading performance improvement solutions built on data integrity, advanced analytics and domain expertise. For more than 40 years, our insights and solutions have been providing hospitals and clinicians, employers and health plans, state and federal government agencies, life sciences companies and policymakers, the facts they need to make confident decisions that directly affect the health and well-being of people and organizations in the US and around the world. The company was acquired by IBM in 2016 to help form a new business, Watson Health. Watson Health aspires to improve lives and give hope by delivering innovation to address the world’s most pressing health challenges through data and cognitive insights.

Truven Health Analytics owns some of the most trusted brands in healthcare, such as MarketScan®, 100 Top Hospitals®, Advantage Suite®, Micromedex®, Simpler® and ActionOI®. Truven Health has its principal offices in Ann Arbor, MI, Chicago, IL, and Denver, CO.


Ariana Nikitas
Ariana.nikitas@truvenhealth.com; 312.533.3437

Brian Erni for Truven Health Analytics, J. Roderick, Inc. Public Relations
brian@jroderick.com; 631.584.2200