To our knowledge, this is the first national study of trends in HTO stays and the first national estimate of the number of US children who experience these observation-length stays. Since 1999, the proportion of HTO stays has represented at least 30% of all pediatric discharges, constituting over 440 000 hospitalizations nationwide annually. The proportion of HTO stays climbed during a period of declining hospital discharges and LOS, suggesting some hospitalizations have been avoided, whereas others have been compressed into shorter treatment periods. Factors that may have contributed to the rise in HTO stays include changes in medical treatment, prospective payment systems,27
care delivered in the ED before admission, the hospitalist movement,30,31
and condition-specific treatment protocols.32
The trends we observe in HTO stays are concurrent with a rise in the proportion of hospital stays that originate in the ED. Although pediatric observation units have been developed both within EDs and on hospital wards, the literature suggests the majority of observation care is delivered in ED-based units.1,23,33,34
Recognizing that, in 2003, only 17% of EDs nationwide reported the ability to admit children to a 23-hour observation unit,35
it is unlikely that the growth in HTO stays is the result of observation unit care. However, care delivered in the ED or other outpatient setting could account for the decline in hospitalization rates.
HTO stays may represent an opportunity for hospitals to deliver observation care in lieu of an admission. Compared with traditional inpatient services, observation units provide families with a treatment environment that prioritizes frequent contact with health care providers and timely reassessment that promotes more rapid discharge.33
Compared with ED settings, observation units provide more time to make decisions regarding evaluation and disposition. For adults, hospitals have realized the potential for observation units to increase patient satisfaction and avoid admissions.6–8,15,36–40
It follows that similar incentives could motivate hospitals to establish formal pediatric observation units. With the small number of pediatric observation units at the present time, significant potential exists for the expansion of these services.
DRGs with the highest proportions of HTO stays fit with conditions that could be expected to require brief treatments. Some represent “high-stakes” conditions for young children at the time of admission (eg, fever). Others represent conditions that can respond to brief periods of high-intensity treatment or monitoring (eg, asthma or ingestion). Many of these DRGs represent conditions that have been cared for successfully in existing pediatric observation units.1,23,34,41
The differences in HTO stays according to age are consistent with overall pediatric hospitalization patterns. Children <5 years of age undergo hospitalization at rates 3 times higher than older children42
and represent the majority of stays in established observation units.1,5
Our results suggest that, for observation units to reach the full spectrum of children, they will need to be structured to care for young pediatric patients.
Noteworthy differences in HTO stays were observed according to insurance status. Medicaid discharges accounted for the smallest proportion of HTO stays across time. Perhaps differences in disease severity or comorbid conditions account for this result. At the same time, Medicaid and uninsured discharges realized the greatest absolute increase in HTO stays. Smaller, although significant, increases in HTO stays were observed for privately insured discharges. It is possible that private payers were promoting shorter stays before 1993 and our observations reflect a lag in realizing HTO stays for other payer groups.
DRG-based reimbursement seems to promote hospital admissions over observation stays. For adults, reimbursement is more favorable for inpatient admission when compared with cases “under observation.”43
Therefore, reimbursement may deter the development of observation units for children. Adequate reimbursement for observation services could promote the expansion of this model of care. In addition, shifting HTO stays to lower-cost observation settings could significantly affect aggregate hospital charges for children nationally.
As more hospitalizations fall into the HTO-stay category, they contribute more to the total charges for inpatient care. Although we observed the greatest absolute increase in mean charges for stays >4 days, these stays constituted only 12.1% of aggregate charges in 2003. With fewer stays entering these long-stay categories, there is less potential for savings to be realized. In adult hospitalizations, the first 3 days contribute considerably to overall expenses, and decreasing LOS beyond 4 days does not significantly affect the cost of inpatient care.44
Delivering care for HTO stays in an observation unit represents an opportunity to achieve cost-savings at the start of an inpatient stay.
There are limitations to the ability to characterize HTO stays with the NIS database. First, the LOS counts, expressed in incremental calendar days, do not offer the detail necessary to determine if a 1-night stay lasted 20 or 40 hours. Despite this limitation, we believe our estimates capture the majority of children who may be eligible for observation unit care.
Second, data reported to HCUP are collected from discharge abstracts. The data set does not include the admission diagnosis. DRGs are assigned after a discharge diagnosis has been determined. Therefore, final billing diagnoses may not accurately capture the reason for an inpatient stay. Discharges that are assigned a DRG have most likely met admission criteria and are less likely to be under observation status. Some hospitals and payers consider patients under observation to have outpatient care, even if that occurs on a hospital ward. These cases may not be included in this inpatient data set. In 2002, HCUP found significant variation in the use of observation status codes within and across states in their databases.45
Inpatient discharges with documented observation services ranged from 0.5% to 6.2% per year. Thus, our results may underestimate the true prevalence of HTO stays, because there is likely to be an unmeasured group receiving services under outpatient observation status.
A third limitation to the NIS is that it does not permit linkage at the individual level across discharges; therefore, readmission rates cannot be assessed. The large proportion of HTO stays raises questions about an unintended consequence of rapid discharges—the need for readmission. Safeguards need to be in place to ensure that HTO stays are not resulting in compromised care, including readmissions or return ED visits.