Variations in Hospitalization Rates among Nursing Home Residents: The Role of Discretionary Hospitalizations

Hospitalization rates among nursing home residents have gained the interest of policymakers as a potential target for Medicare cost-containment strategies. Added to the expected savings associated with reducing hospitalization rates, researchers also cite the potential benefit of reducing residents' risks of iatrogenic illnesses and psychological trauma (Fried and Mor 1997). Although research findings have identified mostly patient-level factors associated with residents' risk of experiencing a hospital transfer, anecdotal evidence suggests that propensity to hospitalize may vary widely across facilities, with case-mix differences providing only partial explanation (Castle and Mor 1996). Recent findings that certain facility-level characteristics, such as special care units and increased physician–resident contact, are associated with decreased risk of hospitalization (Intrator, Castle, and Mor 1999), further bolster speculation regarding nonpopulation causes of variation in hospitalization rates. Despite the likelihood that variations in hospitalization rates across nursing homes reflect both under- and overutilization, most investigations have focused on the problem of overutilization, thus limiting our understanding of what factors may account for the nearly five-fold discrepancy in hospitalization rates across nursing homes (Castle and Mor 1996). Findings from the larger body of geographic variations research exploring hospital use rates among community-based populations offers insight regarding methods that are likely to be useful in exploring variations in hospitalization rates among nursing home based populations. For example, previous studies have established that community hospital discharge rates for certain low discretionary conditions (e.g., myocardial infarction) exhibit much less dispersion among geographic regions relative to discharge rates for more highly discretionary conditions (e.g., transient cerebrovascular ischemia) (Paul-Shaheen, Clark, and Williams 1987)—where discretionary refers to the degree to which doctors face uncertainty regarding the use of in-hospital treatment versus other treatment options. While there is no consensus, many researchers believe that when clear and compelling medical guidelines are absent, decisions to hospitalize may be influenced by the availability of area resources, leading to what has been called, “supply-sensitive” hospitalizations (Wennberg 2002). Moreover, the extent to which supply-sensitive differences are observed through variations in hospitalization rates appears to vary with the level of professional discretion associated with a particular condition (Fisher et al. 2000; Roos, Wennberg, and McPherson 1988). Thus, it follows that hospitalizations among nursing home residents that can be classified as highly discretionary should also exhibit greater variability compared to less discretionary hospitalizations. In response, this paper posits that the extent to which highly discretionary conditions are more sensitive to contextual and supply-sensitive factors will be reflected in the role of facility-level organizational and structural factors and area-market health delivery factors in explaining variations of nursing home hospitalization rates, after controlling for differences in population case-mix. Since ideally, hospital transfers should be relatively invariant to contextual and market-level attributes, consideration of the discretionary level provides some optimism for expanding our understanding of the contribution of nonclinical factors to variations in hospital use among nursing home residents.