Hospitals’ Diversity of Diagnosis Groups and Associated Costs of Care

BACKGROUND AND OBJECTIVES: Hospitals treating patients with greater diagnosis diversity may have higher fixed and overhead costs. We assessed the relationship between hospitals’ diagnosis diversity and cost per hospitalization for children. METHODS: Retrospective analysis of 1 654 869 all-condition hospitalizations for children ages 0 to 21 years from 2816 hospitals in the Kids’ Inpatient Database 2016. Mean hospital cost per hospitalization, Winsorized and log-transformed, was assessed for freestanding children’s hospitals (FCHs), nonfreestanding children’s hospitals (NFCHs), and nonchildren’s hospitals (NCHs). Hospital diagnosis diversity index (HDDI) was calculated by using the D-measure of diversity in Shannon–Wiener entropy index from 1254 diagnosis and severity-of-illness groups distinguished with 3M Health’s All Patient Refined Diagnosis Related Groups. Log-normal multivariable models were derived to regress hospital type on cost per hospitalization, adjusting for hospital-level HDDI in addition to patient-level demographic (eg, age, race and ethnicity) and clinical (eg, chronic conditions) characteristics and hospital teaching status. RESULTS: Admission counts were 383 789 (23.2%) in FCHs, 588 463 (35.6%) in NFCHs, and 682 617 (41.2%) in NCHs. Unadjusted mean cost per hospitalization was $10 757 (95% confidence interval [CI]: $9451 to $12 243) in FCHs, $6264 (95% CI: $5830 to $6729) in NFCHs, and $4192 (95% CI: $4121 to $4265) in NCHs. HDDI was significantly (P CONCLUSIONS: Greater diagnosis diversity was associated with increased cost per hospitalization and should be considered when assessing associated costs of inpatient care for pediatric patients.