SOCIOECONOMIC INFLUENCE ON SMALL AREA HOSPITAL UTILIZATION

Health care policy makers, concerned with the rising cost of health ca re, have focused on the observed variation in the use of hospitals as a potential area in which to lower health care costs, i.e., if hospita l utilization can be decreased, health care costs may also decline. Ho wever, it is crucial that the reasons for the observed variation in th e current practice be understood or attempts to reduce costs may lead to policies that harm groups of patients and the providers and institu tions currently delivering care. Using hospital discharge data from 59 hospital market communities in the lower peninsula of Michigan in 198 4-86, the authors examined possible associations between socioeconomic characteristics and the observed small area variation in hospital dis charge rates. First, a series of Poisson regressions was used for each of five covariates and 112 modified diagnosis-related groups (DRGs). Then, multiple regressions were examined, utilizing the five socioecon omic characteristics, after excluding statistically influential commun ities. The results indicate that community characteristics, including education, poverty, and unemployment, have a statistically significant association with the observed small area hospital discharge rate for many DRGs. Moreover, the direction of the effect is consistent across multiple disease categories. In multiple regressions, the five selecte d socioeconomic variables explained 48% of the variance for medical ad missions and 19% for surgical admissions. For most DRGs, high educatio nal levels were associated with lower hospitalization rates. The autho rs also identified statistically influential communities whose hospita l utilization profile was different from that of most communities in M ichigan.