Clinical Oncology

Are Long-Term Acute Care Hospitals Cost Effective for Chronically Critically Ill Patients?

May 1, 2013
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By Linda L. Chlan, RN, PhD, Dean’s Distinguished Professor of Symptom Management Research, The Ohio State University, College of Nursing. Dr. Chlan reports that she receives grant/research support from the National Institutes of Health.

Synopsis: Chronically critically ill patients who receive care in either acute care ICUs or in long-term acute care hospitals have similar 1-year survival rates. However, long-term acute care hospitals incur a higher overall cost, due to higher Medicare reimbursement rates to these facilities.

Source: Kahn JM, et al. Effectiveness of long-term acute care hospitalization in elderly patients with chronic illness. Medical Care 2013;51:4-10.

The authors of this large, retrospective cohort study compared survival and health care utilization costs in patients > age 65 who transferred to a long-term acute care (LTAC) hospital with those factors in patients who remained in an acute care hospital’s ICU. Data were abstracted and linked from several large national databases for the years 2002-2006. These included the Medicare Provider Analysis and Review (MedPAR) Files, the Medicare Denominator File, zip code-level population data from the U.S. census, and year-specific hospital characteristics from the Center for Medicare and Medicaid Healthcare Cost Report Information System (HCRIS). The investigators pointed out that Medicare is the primary payer for 75% of LTAC patients. The primary outcome was survival within 1 year. Secondary outcomes were three types of costs and spending for: 1) the entire episode of acute care and LTAC hospitalization, 2) post-acute care hospitalization, and 3) 180-day hospitalization-related costs including the initial acute care stay and the post-acute care period. A series of regression models, including proportional hazards regression and linear regression, were applied to the large dataset considering covariates of age, gender, race, socioeconomic status, comorbidities, and hospital status (for profit, nonprofit, government).

A total of 234,799 patients were considered in the final sample, with 20.6% of these patients transferred to LTACs. A majority of the LTACs (71.7%) were for profit, followed by nonprofit (22.5%) and government owned (5.8%); half were co-located in an acute care facility and half were free standing. Clinical and demographic characteristics were similar between the two patient groups, including 1-year mortality. Transfer to an LTAC was associated with lower total and post-acute care costs, but with higher Medicare payments. The main driver of lower costs for LTAC patients was the reduction in post-acute care hospitalizations. The investigators concluded that initial lower costs for patients transferred to LTACs are primarily based on earlier transfer out of the ICU and a reduction in admissions for skilled nursing facilities, as these types of care settings are a main contributor to health care costs in this patient population post-ICU.


The investigators note in their article that LTACs were among the fastest growing segment of acute care in the United States until 2007 when a moratorium was placed on the certification of new facilities. This may have been due in part to growth in Medicare spending and reimbursement for LTACs. While these facilities provide care for a small but resource-intensive group of patients, in general this group of chronically critically ill patients have poor outcomes. Thus, the investigators were interested in comparing survival and health care costs for Medicare beneficiaries in LTACs vs those who remain in acute care ICUs. Surely, acute care ICUs are more expensive to provide care for these high-resource intensive patients. Surprisingly, the results of this large cohort study that used sophisticated econometric principles did not support this supposition. While LTACs indeed are specialized care centers for the chronically critically ill, the study from Kahn and colleagues indicates these facilities may be more expensive in the long run due to higher Medicare reimbursement rates.

On some levels, the results of this cohort study highlight everything that is wrong with the U.S. health care system. The United States spends more on health care than any other industrialized nation, yet we do not have superior outcomes. In this study, the survival was the same for patients transferred to LTACs as for those patients who remained hospitalized with chronic critical illness in acute care ICUs. This does not seem possible that similar outcomes were achieved, yet at a much higher cost due to reimbursement rates!

While the principle behind LTACs is sound, an examination of how they are reimbursed is needed. Kahn et al are to be commended for shedding some light on the reimbursement issue and raising awareness that there is no difference in outcomes related to survival in patients transferred to LTACs compared to those who remain in acute care ICUs. The investigators recommend some sort of bundled payments for care and the implementation of accountable care organizations to rein in costs for these complex patients, with the inclusion of their findings to begin to inform policy on payment models for acute care and LTACs.