Children’s Hospitals: We Get What We Pay For

In 2016, the US spent $3.34 trillion on health care, with almost one-third of it allocated to hospitalizations¹; of that total, $47.7 billion was for pediatric hospitalizations.² As hospitalization expenditures continue to increase, much attention is understandably focused on how to identify the drivers of these high-cost events, in particular, on what explains the considerable variation in hospitalization costs among different hospitals caring for similar conditions. On one hand, we know that certain patient characteristics are associated with more expensive care. We have learned, for example, that children with documented high-risk social conditions have longer lengths of stay³ and those children hospitalized from low-income zip codes also incur higher costs for common pediatric conditions compared with children from high-income zip codes.⁴ But these variations in patient features are not enough themselves to account for the cost differences observed among different hospitals.

In this issue of Pediatrics, Berry et al⁵ offer another insight into the phenomenon of hospital cost variation. Beginning with the premise that hospitals that care for a greater variety of conditions likely incur a higher set of fixed costs, the authors invoke a novel instrument, the hospital diversity of diagnosis index (HDDI), …

Address correspondence to Andrew D. Racine, MD, PhD, Montefiore Health System, 111 E 210th St, Bronx, NY 10467. E-mail: aracine{at}montefiore.org