Observation Units Could Save $3.1 Billion Nationally Per Year

Hospital observation units could save $1,572 per patient; $4.6 million annually per hospital

TUESDAY, Oct. 2 (HealthDay News) -- The addition of observation units to U.S. hospitals which do not currently have them in place could save $3.1 billion nationally per year in health care costs, according to a study published online Sept. 26 in Health Affairs.

Christopher W. Baugh, M.D., M.B.A., from Harvard Medical School in Boston, and colleagues conducted a literature review to determine the average cost savings per observation unit visit, and then ran a Monte Carlo simulation to estimate national cost savings that would result from increasing the prevalence and use of observation units for patients who would stay there for less than 24 hours.

Based on data from the review, national surveys, and the simulation model, the researchers estimated that the average cost savings per patient would be $1,572 if hospitals without observation units had them in place. In addition, there would be annual hospital savings of $4.6 million and annual national cost savings of $3.1 billion.

"Hospitals may realize substantial cost savings by increasing the use of structured observation units, which represent a more efficient mode of care delivery for eligible patients than inpatient wards," the authors write. "Observation units represent a feasible care innovation worthy of further evaluation. The wider use of observation units may create cost savings and should be a model for acute care redesign to increase value in the U.S. health care system."

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