Estimating the economic impact of a half-day reduction in length of hospital stay among patients with community-acquired pneumonia in the US

Abstract

Background: A recent study suggested that levofloxacin significantly reduces the hospital length of stay (LOS), by 0.5 days (p = 0.02), relative to moxifloxacin in patients with community-acquired pneumonia (CAP). The current analysis evaluated the potential economic impact of this half-day reduction in LOS.

Methods: A cost model was developed to estimate the impact of a half-day reduction in LOS for CAP hospitalizations in the US. CAP incidence, hospitalization rate, and costs were obtained from published studies in PubMed and from publicly available government sources. The average daily cost of hospitalization was estimated for fixed costs, which comprise 59% of total inpatient costs. Costs from prior years were inflated to 2007 US dollars using the consumer price index. A range of cost savings, calculated using inpatient CAP costs from several studies, was extrapolated to the US CAP population.

Results: Using the Centers for Disease Control National Hospital Discharge estimate of 5.3 days LOS for CAP, and an average cost (2007 $US) of $13,009 per CAP hospitalization, a daily fixed cost of $1448 was estimated. The resultant half-day reduction in costs associated with LOS was $724/hospitalization (range $457 to $846/hospitalization). When fixed and variable costs were considered, the estimated savings were $1227.27/episode. The incidence of CAP was estimated to be 1.9% (5.7 million cases/year based on current population census), and the estimated rate of CAP hospitalization was 19.6% (1.1 million annual hospitalizations). At $13,009/CAP-related hospitalization, total fixed inpatient costs of $8.6 billion annually were projected. The half-day reduction in LOS would therefore generate potential annual savings of approximately $813 million (range $513 million to $950 million). When total costs (fixed plus variable) were estimated, the mean savings for a half-day reduction would be approximately $1227/episode (range of $775 to $1434) or $1.37 billion annually in the US CAP population (range of $871 million to $1.6 billion). Limitations include the use of a single study for the estimation of fixed costs but a diversity of sources used for estimates of other variables, and lack of data with respect to the effects on costs of diagnostic-related groups, discounted contracts, and capitated payments.

Conclusions: A relatively small decrease in LOS in CAP can have a substantial cost impact, with estimated savings of $457 to $846 per episode or $500-$900 million annually. Additional evaluation is warranted for interpreting these cost-savings in the context of current antibiotic prescribing patterns.