With pressures mounting to contain cost, benchmarking clinical performance becomes increasingly important. Often such analyses are conducted broadly at the overall cost-per-case level by MS-DRG. Although this level of analysis should be helpful in identifying potential savings, another step is needed to determine which cost centers offer the greatest potential. Analyzing cost by department for specific services, therefore, is an important next step.

In the March 2010 issue of hfm, we studied costs by department for the three Medicare severity-adjusted DRGs (MS-DRGs) representing claims for heart failure and shock—MS-DRGs 291, 292, and 293. This analysis is intended to be an update of our original study, comparing the FY08 findings of the previous analysis with the findings for FY12.

Data for our updated analysis of MS-DRGs 291, 292, and 293 were obtained from the FY12 final Medicare Provider Analysis and Review file.Costs were calculated at the claim level using department-specific charge data for these claims and corresponding departmental cost-to-charge ratios from Medicare cost report data for each facility. The data are limited to short-term acute care facilities and exclude claims from outside the United States, distinct part units, and facilities with insufficient cost report data available.

Since publication of the FY08 data, there have been several changes to the source data. As a result of enhancements to the reporting process and collection of more-detailed information on the revised 2552-10 Medicare cost report forms, we are now able to break out a number of specialized cost centers from their more general categories, most notably including removing CT and MRI from the category of radiology, cardiac catheterization from cardiology, and implantable devices from medical surgical supplies.

In this analysis, these specialized cost centers are factored into the “All Other” category in the FY12 data. This difference is important to note when comparing the more recent statistics with their FY08 counterparts, as these changes are likely to affect the results. 

The updated information appears to show somewhat stable cost-per-case figures related to medical services. One noteworthy change, however, is a general rise in total bed costs as a percentage of all costs across all three MS-DRGs. It also is interesting to note that, for MS-DRG 291, the percentage of costs for routine beds declined between FY08 and FY12, whereas the percentage for specialty beds increased. It may be grounds for additional analysis to examine whether this shift towards increased special care (intensive care/coronary intensive care) for the highest acuity MS-DRG is the result of a change in patterns of care, utilization of additional special care capacity resulting from hospital expansion and renovation, or other factors. 

This information, along with the prior research, should prove useful to hospitals wanting to examine how their utilization of resources compares with national averages. By incorporating the prior study, it is also possible to examine whether the national trends have occurred locally. 

Exhibit 1


Exhibits 2 & 3


This analysis was performed by American Hospital Directory, Inc. Louisville, Ky. For more information, contact William Shoemaker at wshoemaker@ahd.com.

Publication Date: Monday, March 03, 2014

Login Required

If you are an existing member, please log in below. Username and password are required.



Forgot User Name?
Forgot Password?

If you are not an HFMA member and would like to access portions of our content for 30 days, please fill out the following.

First Name:

Last Name:


   Become an HFMA member instead