An activity based approach for measuring a hospital’s output units of care

Traditionally used units of hospital output have been adjusted patient days (APD) and adjusted discharges, both of which assume patient profiles are equivalent across hospitals. This paper introduces a standardized measure for a hospital output unit of care (HUC) as a function of the direct patient care activities. An HUC is defined as the equivalent resources required to deliver one general medical/surgical inpatient day. The HUC follows a patient activity centric approach, and derives an equivalency parameter for each of the care activities in a hospital. These equivalencies provide a model for the roll-up of all care activities into a unified output measure which inherently captures the patient heterogeneity. The developed HUC measure is comprised of five activity components: (i) case-mix adjusted inpatient days, (ii) intensive care, (iii) nursery, (iv) outpatient care, and (v) ancillary services. Within each component are specific billable activities tracked by MEDPAR, the primary data source for the HUC derivation. Application is demonstrated on a set of 1000+ hospitals, utilizing 320 data points for each hospital. The model was validated by showing a strong linear correlation (R² = 0.894) to the total direct operating cost of a hospital, relative to the APD correlation (R² = 0.742). Further, there is significant variation in the HUC/APD ratio (μ = 1.75 and σ = 2.05) confirming that the HUC is not just a scalar of APD. Existing and future hospital productivity studies can readily integrate and leverage the HUC output model.