Cluster analysis application to identify groups of individuals with high health expenditures

We compare and demonstrate the effectiveness of two clustering methods with the main purpose of identifying characteristic profiles of high utilizers of health care. In this work, we use three sets of mutually independent longitudinal data that are nationally representative of the US adult working-age civilian non-institutionalized population. We compare k-means, a commonly used clustering method, with a k-medoids algorithm called Partitioning Around Medoids. We use one cohort of data to create clusters based on similar characteristics of individuals for both clustering methods. We examine these characteristic compositions of the highest three average total expenditure clusters from this cohort. We also examine the health expenditure distributions for this cohort over the following two years. We validate the approach by applying the centers of the clusters to two other cohorts of similar data. We form clusters based on demographic, economic, and health-related characteristics that are commonly used in studies of health care utilization. We demonstrate the consistency of our results across the three cohorts of data and across different types of health expenditures, such as office-based/outpatient and drug. Clusters can be formed with other more homogeneous data, such as Medicaid, Medicare, employer sponsored insurance, or individual private plans issued under the Affordable Care Act. This approach can be used to follow similar groups over time for other types of health outcomes.