Those Least Able to Pay May Be More Vulnerable to Costly Repeat Observation Stays

People living in disadvantaged neighborhoods are more likely to experience repeat observation stays at hospitals, which may lead to costly medical bills without a means to pay them, according to a recent study from UW-Madison researchers.  

This research, which included lead author Ann Sheehy, MD, MS, associate professor, Hospital Medicine, and senior author Amy Kind, MD, PhD, associate professor, Geriatrics and Gerontology, used the Neighborhood Atlas to account for social determinants of health like housing, income, employment, transportation, and education, to identify where people who were experiencing re-observations stays lived.

They found that after an observation hospital stay, people living in the most disadvantaged neighborhood have a 13% increased risk of repeat observation, compared to those in the least disadvantaged neighborhoods, after accounting for factors such as chronic medical problems, race and dual eligibility.

“It shows that where you live, and the environment that you live in can increase your risk of repeat observation stays,” Dr. Sheehy said. 

Additionally, chronic re-observation, or more than one observation stay within 30 days, is associated with progressively greater disadvantage.

People who are more at risk to experience re-observation are more likely to be younger, Black, receiving Medicaid, and disabled. They are also more likely to live in rural areas, have more comorbidities, have more observation stays in the prior 12 months, and have heart failure and COPD as index observation stays.

Not only are those living in disadvantaged neighborhoods more likely to experience re-observations, they are also the least able to pay for the associated high costs.

For many hospital patients, the difference between observation and inpatient status is seemingly minor. However, that is not the case for Medicare beneficiaries. Medicare does not pay for observation stays the same way it does for inpatients. There is no limit to out-of-pocket costs for observation stays, leading to potentially very costly medical bills.

This is concerning as the associated costs may deter people from seeking necessary hospital care.

“Observation visits may serve as a “safety net” for patients who would otherwise discharge home except for lack of fundamental social determinants of health,” Dr. Sheehy said. These range from housing and transportation to uncertain access to ambulatory care, medications, and other necessary health care resources.

As a solution, the researchers recommend that hospitals and providers consider using neighborhood disadvantage measured using the Neighborhood Atlas in initiatives to identify patients needing assistance to help prevent repeat observation hospitalizations.

“Ultimately, policymakers should consider these equity considerations in future Medicare regulatory decisions,” Dr. Sheehy said.

Research Team

This project was supported by a National Institute on Minority Health and Health Disparities Award. Dr. Amy Kind served as the PI.

 

Banner photo, senior author Amy Kind, MD, PhD, and lead author Ann Sheehy, MD, MS. Credit: Clint Thayer/Department of Medicine.