Importance

The Centers for Medicare & Medicaid Services (CMS) defines observation status for hospitalized patients as a “well-defined set of specific, clinically appropriate services,” usually lasting less than 24 hours, and that in “only rare and exceptional cases” should last more than 48 hours. Although an increasing proportion of observation care occurs on hospital wards, studies of patients with observation status have focused on the efficiency of dedicated units.

Objective

To describe inpatient and observation care.

Design and Setting

Descriptive study of all inpatient and observation stays between July 1, 2010, and December 31, 2011, at the University of Wisconsin Hospital and Clinics, a 566-bed tertiary academic medical center.

Participants

All patients with observation or inpatient stays during the study period.

Main Outcomes and Measures

Patient demographics, length of stay, difference between cost and reimbursement per stay, and percentage of patients discharged to skilled nursing facilities.

Results

Of 43 853 stays, 4578 (10.4%) were for observation, with 1141 distinct diagnosis codes. Mean observation length of stay was 33.3 hours, with 44.4% of stay durations less than 24 hours and 16.5% more than 48 hours. Observation care had a negative margin per stay (−$331); the inpatient margin per stay was positive (+$2163). Adult general medicine patients accounted for 2404 (52.5%) of all observation stays; 25.4% of the 9453 adult general medicine stays were for observation. The mean length of stay for general medicine observation patients was 41.1 hours, with 32.6% of stay durations less than 24 hours and 26.4% more than 48 hours. Compared with observation patients on other clinical services, adult general medicine had the highest percentage of patients older than 65 years (40.9%), highest percentage female patients (57.9%), highest percentage of patients discharged to skilled nursing facilities (11.6%), and the most negative margin per stay (−$1378).

Conclusions and Relevance

In an academic medical center, observation status for hospitalized patients differed markedly from the CMS definition. Patients had a wide variety of diagnoses; lengths of stay were typically more than 24 hours and often more than 48 hours. The hospital lost money, primarily because reimbursement for general medicine patients was inadequate to cover the costs. It is uncertain what role, if any, observation status for hospitalized patients should have in the era of health care reform.

Barbara A. Liegel

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