Small area analysis of hospital discharges for musculoskeletal diseases in Michigan: the influence of socioeconomic factors.

PURPOSE The rise in health care costs has occasioned a number of initiatives in an attempt to reduce the rate of increase. Despite the growth of health maintenance organizations and preferred provider organizations and the introduction of Medicare's prospective payment system, health care costs have continued to increase. Coincident with these efforts, a number of researchers have shown that there exists wide variation in age-adjusted hospital discharge rates, which translate into significant variation in per capita expenditures. Much of the focus on the reasons for hospital admission variability has been on physician practice variation. If most of the variation in hospital discharge rates is due to physician practice style, then payment systems can be developed (e.g., capitation) that limit physician practice variation without harming patients. We examined socioeconomic factors in Michigan communities to assess their association with hospital discharge rates for patients with musculoskeletal diseases. PATIENTS AND METHODS Data on hospital discharges from 1980 and 1987 were taken from the Michigan Inpatient Data Base. All admissions from the major diagnostic category 8, diagnosis-related group (DRG) 209-256 were included. Zip code-specific hospitalization data were grouped into small geographic areas or hospital market communities (HMCs). Discharge rates were calculated, and profiles of the socioeconomic characteristics of each of the HMCs were developed. A Poisson regression model with an extrasystematic component of variance was used to analyze the association of HMC socioeconomic characteristics with age-adjusted hospital use. RESULTS We found that four socioeconomic variables, average annual income per capita, percent of the population with four years of college, percent of the population living in an urban area, and percent of families with incomes below the poverty line, explained 26.6% (R2) of the variation in overall hospital discharge rates (p less than 0.001). Moreover, we found that the ability of the model to explain variability was influenced by the type of disease, and that these socioeconomic variables had a consistent effect across the range of DRGs. Finally, we noted that, over the period of 1980 to 1987, socioeconomic factors remained important in explaining hospital use despite the dramatic changes in the delivery of care over this period. CONCLUSION Socioeconomic factors play a significant role in explaining the observed variation in hospital discharge rates for musculoskeletal diseases. Models utilizing only physician practice variation to account for the population-based differences in discharge rates are overly simplistic. In order to ensure that vulnerable subsets of the population are not harmed by the introduction of cost-containment strategies based on simplistic models, more attention must be paid to the socioeconomic and epidemiologic factors related to hospital use.