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The Costs and Effectiveness of NeonatalIntensive Care

August 1981

NTIS order #PB82-101411

CASE STUDY #10

THE IMPLICATIONS OF

COST-EFFECTIVENESSANALYSIS OF

MEDICAL TECHNOLOGY

AUGUST 1981

BACKGROUND PAPER #2: CASE STUDIES OFMEDICAL TECHNOLOGIES

CASE STUDY #10: THE COSTS AND EFFECTIVENESS OFNEONATAL INTENSIVE CARE

Peter Budetti, M. D., J.D. Nancy Barrand, B.A.

Peggy McManus, M.H.S. Lu Ann Heinen, B.A.

Health Policy Program, University of California, San Francisco

,OTA Background Papers are documents that contain information believed to beuseful to various parties. The information undergirds formal OTA assessments or isan outcome of internal exploratory planning and evaluation. The material is usuallynot of immediate policy interest such as is contained in an OTA Report or TechnicalMemorandum, nor does it present options for Congress to consider.

CONGRESS OF THE UNITED STATES

Office of Technology AssessmentWashington D C 20510

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Library of Congress Catalog Card Number 80-600161

For sale by the Superintendent of Documents,U.S. Government Printing Office, Washington, D.C. 20402

Foreword

This case study is one of 17 studies comprising Background Paper #2 for OTA’sassessment, The Implications of Cost-Effectiveness Analysis of Medical Technology.That assessment analyzes the feasibility, implications, and value of using cost-effec-tiveness and cost-benefit analysis (CEA/CBA) in health care decisionmaking. The ma-jor, policy-oriented report of the assessment was published in August 1980. In additionto Background Paper #2, there are four other background papers being published inconjunction with the assessment: 1) a document which addresses methodologicalissues and reviews the CEA/CBA literature, published in September 1980; 2) a casestudy of the efficacy and cost-effectiveness of psychotherapy, published in October1980; 3) a case study of four common diagnostic X-ray procedures, to be published insummer 1981; and 4) a review of international experience in managing medical tech-nology, published in October 1980. Another related report was published inSeptember of 1979: A Review of Selected Federal Vaccine and Immunization Policies.

The case studies in Background Paper #2: Case Studies of Medical Technologiesare being published individually. They were commissioned by OTA both to provideinformation on the specific technologies and to gain lessons that could be applied tothe broader policy aspects of the use of CEA/CBA. Several of the studies were specifi-cally requested by the Senate Committee on Finance.

Drafts of each case study were reviewed by OTA staff; by members of the ad-visory panel to the overall assessment, chaired by Dr. John Hogness; by members ofthe Health Program Advisory Committee, chaired by Dr. Frederick Robbins; and bynumerous other experts in clinical medicine, health policy, Government, and econom-ics. We are grateful for their assistance. However, responsibility for the case studies re-mains with the authors.

JOHN H. GIBBONSDirector

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Advisory Panel on The Implications ofCost-Effectiveness Analysis of Medical Technology

John R. Hogness, Panel ChairmanPresident, Association of Academic Health Centers

Stuart H. AltmanDeanFlorence Heller SchoolBrandeis University

James L. BenningtonChairmanDepartment of Anatomic Pathology and

Clinic a/ LaboratoriesChildren Hospital of San Francisco

John D. ChaseAssociate Dean for Clinical AffairsUniversity of Washington School of Medicine

Joseph FletcherVisiting ScholarMedical EthicsSchool of MedicineUniversity of Virginia

Clark C. HavighurstProfessor of LawSchool of LawDuke University

Sheldon LeonardManagerRegulatory AffairsGeneral Electric Co.

Barbara J. McNeilDepar tment o f R a d i o l o g yPeter Bent Brigham Hospital

Robert H. MoserExecutive Vice PresidentAmerican College of Physicians

Frederick MostellerChairmanDepartment of BiostatisticsHarvard University

Robert M. SigmondAdvisor on Hospital AffairsBlue Cross and Blue Shield Associations

Jane Sisk WillemsVA ScholarVeterans Administration

OTA Staff for Background Paper #2

Joyce C. Lashof, Assistant Director, OTAHealth and Life Sciences Division

H. David Banta, Health Program Manager

Clyde J. Behney, Project Director

Kerry Britten Kemp, * EditorVirginia Cwalina, Research Assistant

Shirley Ann Gayheart, SecretaryNancy L. Kenney, Secretary

Martha Finney, * Assistant Editor

Other Contributing Staff

Bryan R. Luce Lawrence Miike Michael A. RiddioughLeonard Saxe Chester Strobe]’

OTA Publishing Staff

John C. Holmes, Publishing Officer

John Bergling Kathie S. Boss Debra M. Datcher Joe Henson

‘ O T A contract personnel

Preface

This case study is one of 17 that compriseBackground Paper #2 to the OTA project on theImplicatiom of Cost-Effectiveness Analysis ofMedical Technology. * The overall project wasrequested by the Senate Committee on Laborand Human Resources. In all, 19 case studies oftechnological applications were commissionedas part of that project. Three of the 19 were spe-cifically requested by the Senate Committee onFinance: psychotherapy, which was issued sepa-rately as Background Paper #3; diagnostic X-ray, which will be issued as Background Paper#5; and respiratory therapies, which will be in-cluded as part of this series. The other 16 casestudies were selected by OTA staff.

In order to select those 16 case studies, OTA,in consultation with the advisory panel to theoverall project, developed a set of selectioncriteria. Those criteria were designed to ensurethat

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as a group the case studies would provide:

examples of types of technologies by func-tion (preventive, diagnostic, therapeutic,and rehabilitative);examples of types of technologies by physi-cal nature (drugs, devices, and procedures);examples of technologies in different stagesof development and diffusion (new, emerg-ing, and established);examples from different areas of medicine(such as general medical practice, pedi-atrics, radiology, and surgery);examples addressing medical problems thatare important because of their high fre-quency or significant impacts (such ascost ) ;examples of technologies with associatedhigh costs either because of high volume(for low-cost technologies) or high individ-ual costs;examples that could provide informativematerial relating to the broader policy andmethodological issues of cost-effectivenessor cost-benefit analysis (CEA/CBA); and

● examples with sufficient evaluable litera-ture.

On the basis of these criteria and recommen-dations by panel members and other experts,OTA staff selected the other case studies. These16 plus the respiratory therapy case study re-quested by the Finance Committee make up the17 studies in this background paper.

All case studies were commissioned by OTAand performed under contract by experts in aca-demia. They are authored studies. OTA sub-jected each case study to an extensive reviewprocess. Initial drafts of cases were reviewed byOTA staff and by members of the advisorypanel to the project. Comments were providedto authors, along with OTA’s suggestions forrevisions. Subsequent drafts were sent by OTAto numerous experts for review and comment.Each case was seen by at least 20, and some by40 or more, outside reviewers. These reviewerswere from relevant Government agencies, pro-fessional societies, consumer and public interestgroups, medical practice, and academic med-icine. Academicians such as economists and de-cision analysts also reviewed the cases. In all,over 400 separate individuals or organizationsreviewed one or more case studies. Although allthese reviewers cannot be acknowledged indi-vidually, OTA is very grateful for their com-ments and advice. In addition, the authors ofthe case studies themselves often sent drafts toreviewers and incorporated their comments.

These case studies are authored workscommissioned by OTA. The authors are re-sponsible for the conclusions of their spe-cific case study. These cases are not state-ments of official OTA position. OTA doesnot make recommendations or endorse par-ticular technologies. During the variousstages of the review and revision process,therefore, OTA encouraged the authors topresent balanced information and to recog-nize divergent points of view. In two cases,OTA decided that in order to more fullypresent divergent views on particular tech-nologies a commentary should be added tothe case study. Thus, following the case

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studies on gastrointestinal endoscopy andon the Keyes technique for periodontal dis-ease, commentaries from experts in the ap-propriate health care specialty have beenincluded, followed by responses from theauthors.

The case studies were selected and designed tofulfill two functions. The first, and primary,purpose was to provide OTA with specific in-formation that could be used in formulatinggeneral conclusions regarding the feasibility andimplications of applying CEA/CBA in healthcare. By examining the 19 cases as a group andlooking for common problems or strengths inthe techniques of CEA/CBA, OTA was able tobetter analyze the potential contribution thatthese techniques might make to the managementof medical technologies and health care costsand quality. The second function of the caseswas to provide useful information on the spe-cific technologies covered. However, this wasnot the major intent of the cases, and theyshould not be regarded as complete and defini-tive studies of the individual technologies. Inmany instances, the case studies do represent ex-cellent reviews of the literature pertaining to thespecific technologies and as such can stand ontheir own as a useful contribution to the field. Ingeneral, though, the design and the fundinglevels of these case studies were such that theyshould be read primarily in the context of theoverall OTA project on CEA/CBA in healthcare.

Some of the case studies are formal CEAs orCBAs; most are not. Some are primarily con-cerned with analysis of costs; others are moreconcerned with analysis of efficacy or effec-tiveness. Some, such as the study on end-stagerenal disease, examine the role that formalanalysis of costs and benefits can play in policyformulation. Others, such as the one on breastcancer surgery, illustrate how influences otherthan costs can determine the patterns of use of atechnology. In other words, each looks at eval-uation of the costs and the benefits of medicaltechnologies from a slightly different perspec-

tive. The reader is encouraged to read this studyin the context of the overall assessment’s objec-tives in order to gain a feeling for the potentialrole that CEA/CBA can or cannot play in healthcare and to better understand the difficulties andcomplexities involved in applying CEA/CBA tospecific medical technologies.

The 17 case studies comprising BackgroundPaper #2 (short titles) and their authors are:

Artificial Heart: Deborah P. Lubeck and John P.Bunker

Automated Multichannel Chemistry Analyzers:Milton C. Weinstein and Laurie A. Pearlman

Bone Marrow Transplants: Stuart O. Schweitz-er and C. C. Scalzi

Breast Cancer Surgery: Karen Schachter andDuncan Neuhauser

Cardiac Radionuclide Imaging: William B.Stason and Eric Fortess

Cervical Cancer Screening: Bryan R. LuceCimetidine and Peptic Ulcer Disease: Harvey V.

Fineberg and Laurie A. PearlmanColon Cancer Screening: David M. EddyCT Scanning: Judith L. WagnerElective Hysterectomy: Carol Korenbrot, Ann

B. Flood, Michael Higgins, Noralou Roos,and John P. Bunker

End-Stage Renal Disease: Richard A. RettigGastrointestinal Endoscopy: Jonathan A. Show-

stack and Steven A. SchroederNeonatal Intensive Care: Peter Budetti, Peggy

McManus, Nancy Barrand, and Lu AnnHeinen

Nurse Practitioners: Lauren LeRoy and SharonSolkowitz

Orthopedic Joint Prosthetic Implants: Judith D.Bentkover and Philip G. Drew

Periodontal Disease Interventions: Richard M.Scheffler and Sheldon Rovin

Selected Respiratory Therapies: Richard M.Scheffler and Morgan Delaney

These studies will be available for sale by theSuperintendent of Documents, U.S. Govern-ment Printing Office, Washington, D.C. 20402.Call OTA’s Publishing Office (224-8996) foravailability and ordering information.

Case Study #10

The Costs and Effectiveness ofNeonatal Intensive Care

Peter Budetti, M. D., J.D.Peggy McManus, M.H.S.

Nancy Barrand, B.A.Lu Ann Heinen, B.A.

Health Policy ProgramUniversity of California, San Francisco

AUTHORS’ ACKNOWLEDGMENTS

We are grateful to many individuals for their assistance in preparing this report.Special thanks are due to our coworkers at the Health Policy Program, in particular,to Philip R. Lee, Albert R. Jensen, Paul Newacheck, Barbara Johnson, and SuzanneStenmark. We also thank Ronald L. Williams, Roderic Phibbs, Ciaran Phibbs, and theanonymous reviewers of the first and second drafts.

In addition, we appreciate the many investigators and organizations who pro-vided us with unpublished data, papers, and other information. We take full responsi-bility for the interpretation of all data, both published and unpublished, other thanany analysis credited to specific authors.

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Contents

PageSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Need and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . 4Supply and Utilization. . . . . . . . . . . . . . . . . . . . . . . 4Cost and Reimbursement . . . . . . . . . . . . . . . . . . . . . 4Effectiveness. ...,,.., . . . . . . . . . . . . . . . . . . . . . . 5Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Definition of Neonatal Intensive Care . . . . . . . . . . . . . 7History of Neonatal Intensive Care. . . . . . . . . . . . . . 7Levels of Neonatal Intensive Care. . . . . . . . . . . . . . . 8Definitional Problems . . . . . . . . . . . . . . . . . . . . . . 9Data Collection Problems Based on Definitional

Confusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Infants Receiving Neonatal Intensive Care:Factors Influencing Present and FutureDemand, . 11

Birthweight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Prematurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Race. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Socioeconomic Status. . . . . . . . . . . . . . . . . . . . . . . . 13Birthrate. . . . . . . . . . . . ...:..... . . . . . . . . . . . . 13Congenital Anomalies . . . . . . . . . . . . . . . . . . . . . . . 13Maternal Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Prenatal Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Medical Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Utilization of Neonatal Intensive Care, . . . . . . . . . . . . 15NICU Admission Rates.. . . . . . . . . . . . . . . . . . . . . . 15Length of Stay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Total Days of Care. . . . . . . . . . . . . . . . . . . . . . . . . . 17Supply of NICU Beds . . . . . . . . . . . . . . . . . . . . . . . . 18

Costs of Neonatal Intensive Care . . . . . . . . . . . . . . . . . 19Findings and Limitations of Cost Data . . . . . . . . . . . 19Cost sby Birthweight, Diagnosis, and Outcome . . . . 21Total Costs and Charges, . . . . . . . . . . . . . . . . . . . . . 23Reimbursement for Neonatal Intensive Care. . . . . . . 23

Effectiveness of Neonatal Intensive Care . . . . . . . . . . . 27Mortality . .,..,..., . . . . . . . . . . . . . . . . . . . . . . . 28Morbidity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Conclusion. ...,. . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Economic Analysis of Neonatal Intensive Care. . . . . . . 39Application of One Method of Economic Analysis to

the Results of This Case Study . . . . . . . . . . . . . . . 40

Federal Policies Related to Neonatal Intensive Care . . . 43

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

LIST OF TABLESTable No. Pagel. Birth Rate, Fertility Rate, and Total Number of

Births, 1975-79. .~. . . . . . . . . . . . . . . . . . . . . . . . . 122. Percentage of Low and Very Low Birthweight

infants Among All Births, by Race, 1950-77. ...., 12

Table No. Page3. Low and VeryLowBirthweightRates, by Race,

1950-77 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134. NICU Admission Rates, 1975-78 . . . . . . . . . . . . . . 165.

6.7.8.

9.

Average Length of Stay in Children’s Hospitals,by Diagnosis, 1976-77 . . . . . . . . . . . . . . . . . . . . . . 17Average Length of Stay, by Hospital . . . . . . . . . . . 17Average Length of Stay, by Region . . . . . . . . . . . . 17Supply of NICUs and Beds in the United States,1976-78 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Number of NICU Beds in the United States . . . . . . . 19

10. Summary of Cost Studies on NICUs . . . . . . . . . . . 2011. Cost by Birthweight Group—All Patients . . . . . . . 2112. Cost by Birthweight Group-Inborn . . . . . . . . . . . 2213. Average Cost by Diagnostic Group and

Outcome . . . . . . . . . . . . . . . . . . . . . . 0 . . . . . . . . . 2214. Alternative Estimates of Total Annual Costs for

Neonatal Intensive Care, 1978 . . . . . . . . . . . . . . . . 2415. Examples of Existing Systems for Reimbursement

of Neonatal Intensive Care. . . . . . . . . . . . . . . . . . . 2516. Who Pays the Bill?. . . . . . . . . . . . . . . . . . . . . . . . . 2517. Inborn Neonatal Mortality Rates, Birthweight

l,001 to l,500 Grams. . . . . . . . . . . . . . . . . . . . . . . 3118. Inborn Neonatal Mortality Rates, Birthweight

1,000 Grams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3119. ’’Serious Handicaps Birthweightght >=51,500

Grams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3420. “Serious Handicaps,’’Birthweight >=1,000

Grams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3521. Total Number and Distribution of Survivors,

Birthweight >=l,500 Grams,1978 . . . . . . . . . . . . . 3922. Information Required for a CEA or CBA of

Neonatal Intensive Care. . . . . . . . . . . . . . . . . . . . . 4023. Kramer’s Cost-Effectiveness Formula . . . . . . . . . . . 4124. National Guidelines for Health Planning:

Obstetrical and Neonatal Resource Standards . . . . 4425. Budgeted Use of Federal Maternal and Child Health

Formula Grant Funds for Infant Intensive Care, byState, Fiscal Year 1978 . . . . . . . . . . . . . . . . . . . . . . 46

LIST OF FIGURESFigure No. Page1.

2.

3.4.

5.

6.

7.

Comparison of Average Daily CostandReimbursement From Various SourcesforloInfants in Neonatal Intensive Care . . . . . . . . . 26Infant, Neonatal, and PostneonatalMortality Rates: United States, 1915-77 . . . . . 28Pooled Neonatal Mortality Data, 1961.76. . . . 32“Serious Handicaps:" Birthweight

Case Study #10:

The Costs and Effectiveness ofNeonatal Intensive Care

Peter Budetti, M. D., J.D.Peggy McManus, M.H.S.

Nancy Barrand, B.A.Lu Ann Heinen, B.A.

Health Policy ProgramUniversity of California, San Francisco

PREFACE

It is frequently stated that neonatal intensive care gives rise to serious ethicalproblems. These problems have been discussed in an extensive literature (39,62,108,120). In general, the ethical discussions have focused on the problem of decidingwhether to initiate or to terminate life-preserving treatment in the case of a particularinfant (39). These discussions do not make clear how, and to what extent, the ethicaIproblems affect policy determinations about the efficiency of neonatal intensive care(56,70). Presumably, the endemic presence of such tragic decisions—”to live or letdie” —leads commentators to suggest that ethics foreclose the possibility of cost-benefitanalysis in neonatal intensive care. Is it ethical to allow cost considerations to dictatelife or death? Is it ethical to subordinate the care of an individual to criteria for max-imizing social benefit? Certain authors wholeheartedly repudiate any thought of a pos-itive answer (104); others are quite ready to embrace an affirmative answer as the onlyethical one (46). The majority of authors in the ethical literature raise the questions butrefrain from extensive analysis.

At present, several problems impede further analysis of the ethical issues as theyrelate to public policy. The first problem is the lack of factual information or clear im-plications of information about neonatal intensive care. Without knowing whether in-fants are being helped or harmed, in what numbers, to what extent, and at what costs,debates over ethics are entirely speculative. Second, the lack of conceptual clarityabout the nature of benefit and costs, about risks, about prognoses, etc., often makesethical discussions unrealistic (63). Third, the ethical, legal, and political significanceof “tragic choices” that expose some individuals to the risk of death in order to benefitothers are only now beginning to be discussed (22).

Thus, although there are certainly ethical problems within neonatal intensivecare, it is unclear how they influence policy decisions. For example, it is certainly notobvious that cost-benefit studies and. policies based on conclusions of these studies arenecessarily excluded by ethical considerations (15). Careful analysis of the ethicalissues requires more complete factual information, clearer concepts, and a firmergrasp of the values which public policy does and should promote. Prolonged dis-cussion of the clinical dilemmas of neonatal intensive care has led to more definitivestatements of moral policy in the nursery (31). Intense and critical discussion of theethical issues in public policy concerning neonatal intensive care might be similarlyproductive.

Albert R. Jonsen, Ph. D.

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4 ● Background Paper #2: Case Studies of Medical Technologies

SUMMARY

The widespread application of neonatal inten-sive care appears to have played a major part inproducing the improved survival, as well as theimproved physical condition, of very low birth-weight infants in recent years. Unfortunately,the number of such very small infants is increas-ing every year, and some survivors continue tosuffer from severe handicaps such as mental re-tardation and cerebral palsy. Rising birth ratesand the high level of risk factors, associatedwith low birthweight, such as teenage pregnan-cy, smoking, and low socioeconomic status, arelikely to create an increasing need for intensivemedical care of the high-risk newborn over thenext decade.

These findings are based on the present studyconducted by the Health Policy Program of theUniversity of California, San Francisco, forOTA. Included in the study and summarizedbelow are sections on the definitions of neonatalintensive care, need and demand, supply andutilization, costs and reimbursement, effective-ness, and economic analysis.

Definitions

Neonatal services reflect a complex mix ofpeople and technologies. In many hospitals, theorganization of these services does not reflectthe three levels of care defined by the Commit-tee on Perinatal Health. As a consequence, theservices provided in different facilities classifiedat the same level can vary considerably, makinga standard level of care difficult to identify inpractice. The absence of uniform definitions oflevels of neonatal intensive care has complicateddata collection, making statistical analysis dif-ficult, especially when comparing cost or uti-lization data for different hospitals,

Need and Demand

The incidence of low birthweight is the mostimportant predictor of illness or death in earlyinfancy and of the need for neonatal intensivecare. Since 1966, there has been a 15-percent de-cline in the overall incidence of low birthweight(2,500 g or less, about 5½ lbs) infants as a pro-

portion of all births, associated with improve-ments in many of the risk factors (e.g., age ofmother, socioeconomic levels, maternal nutri-tion, and personal health practices). Still, some230,000 low birthweight infants are born an-nually. Moreover, the birth rate for the UnitedStates has increased by nearly 7 percent since1975, mainly owing to larger numbers ofwomen entering the childbearing ages, and thishas resulted in a new increase in the absolutenumber of very low birthweight (l,500 g or less,about 31/4 lbs) infants born each year since 1974.The main determinants of future demand fornewborn intensive care will most likely be theduration of the current “baby boom” and therates of prematurity and low birthweight. Con-tinued increases in the number of very lowbirthweight infants will expand the need forneonatal intensive care.

Supply and Utilization

No national data exist that describe theamount of neonatal intensive care currentlybeing delivered in the United States. Only roughestimates based on studies with small samplesizes and variations in definitions of levels ofcare can be computed. The following estimatesof neonatal intensive care supply and use in theUnited States were extrapolated from dataavailable in the literature and from individualneonatal intensive care units (NICUs):

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NICU admission rates: 6 percent of all livebirths go to intensive care (about 200,000admissions annually; range 3.8 to 8.9 per-cent of all births).Estimated average length of stay (ALOS): 8to 18 days per patient (mean 13).Estimated total patient days: 2.6 million.Number of hospitals with NICUS: approx-imately 600.Number of intensive care beds (Levels IIand III): 7,500 (approximately 2.3 beds per1,000 live births).

Cost and Reimbursement

The total costs of neonatal intensive care are

Case Study #10: The Costs and Effectiveness of Neonatal Intensive Care ● 5

similar to the costs of end-stage renal diseaseand coronary artery bypass surgery. Varioussources report neonatal intensive care costs thatrange from $1,800 to over $40,000 per patient.We estimated average expenditures per patientin 1978 to be about $8,000. For the United Statesas a whole, this amounts to approximately $1.5billion. To estimate the total annual costs forneonatal intensive care, we used the followingtwo alternative calculations.

Effectiveness

Numerous recent reports claim to demon-strate the effectiveness of intensive care of thenewborn. In fact, much of the literature consistsof studies with sample sizes too small and popu-lations too diverse for generalization. For thepresent study, we combined all available data in5-year blocks and were able to conclude thatneonatal intensive care has played a major role

1. Number of Percentage of all births Mean cost /births x admitted to NICUS x patient = Total cost(3,300,000) (0.06) ($8,000) $1.58 billion

(1978 dollars)2. Number of

Level III beds Estimatedreported by Ross occupancyLaboratories x rate x Days/ year x Mean cost/day = Total cost(7,387) (0.90) (365) ($545) $1.3 billion

(1978 dollars)

Cost data are plagued with even greater prob-lems than utilization and supply data (e.g.,NICUs are seldom separate cost centers in hos-pitals, and reported costs often exclude ancillaryservices and physician fees). Nevertheless, ex-isting studies do show: 1) total costs for sur-vivors are higher than for nonsurvivors; 2) asbirthweight decreases, cost increases; and 3)total costs increase with complications such ashyaline membrane disease or anomalies that re-quire surgery.

The present system of reimbursing neonatalintensive care according to a uniform per diemrate encourages cross-subsidies, so that costsproperly attributable to one patient may beborne by other patients. Hospital charges forneonatal intensive care are often not fully reim-bursed by medicaid or by insurance plans thatpay only for “allowable” costs, increasing theincentives for cross-subsidization among pay-ers. Moreover, because it is difficult to adjustcharges continuously with varying levels ofcare, expected revenues often are below costs atthe beginning of a stay and exceed costs at theend, allowing for cross-subsidies based on var-iations in the length of stay.

in improving the chances of survival of manynewborns, particularly those of very low birth-weight. Mortality rates within birthweightgroups have declined over time, strongly sup-porting the conclusion that neonatal intensivecare has helped improve survival. Given thescarcity of randomized clinical trials and thepossible contribution of additional medical andnonmedical factors, however, it is impossible toquantify precisely how much of the improve-ment in survival is due to intensive medical careof the newborn.

On the basis of limited morbidity data, it ap-pears that the incidence of serious problems insurvivors of neonatal intensive care is probablydeclining. In any case, the rate of serious handi-caps has not increased as had been feared whenneonatal intensive care first began to producesurvivors of extremely low birthweight. Itshould be noted, however, that at the same timethe incidence of serious problems is decreasing,the absolute number of severely handicapped in-dividuals may be increasing. This seeminglycontradictory situation may be occurring, espe-cially with regard to infants weighing 1,000 g orless. Even though the number of normal sur-

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vivors has increased eightfold to twentyfoldsince 1960, the small number of severely han-dicapped individuals has risen. These results il-lustrate the dilemma of trying to determinewhether intensive care of the newborn is effec-tive. Every year several thousand babies whowithout neonatal intensive care would have diedare now surviving to lead normal lives. Part ofthe price for this success, however, is a per-sistently high number of abnormal survivors.

Economic Analysis

Cost-benefit and cost-effectiveness analyses(CBAs and CEAs) conducted to date are of lim-ited value. For example, many reports containstatements that the costs of hospitalization in anintensive care nursery are far less than the costsof life-long institutionalization for a severelydefective survivor. Such analyses presume fullybeneficial outcomes with treatment and totallyunavoidable, severe handicaps without treat-ment.

A method of economic analysis developed byeconomist Marcia Kramer is neither CBA norCEA, but uses elements of both to estimate andcompare the actual dollar costs and benefits ofdifferent levels of intensity of medical care, eachwith different outcomes. For purposes of illus-tration, we applied this methodology to theaforementioned effectiveness data. The ten-tative findings yielded were that neonatal inten-sive care of infants weighing 1,500 g or less ismarginally cost effective, but that treatment ofthe subgroup of infants weighing 1,000 g or lessis not yet cost effective unless only the most re-cent reports are used to estimate present out-comes. Data and methodological limitationscommon to all such analyses preclude develop-ing an estimate of the cost effectiveness of neo-natal intensive care about which one could beconfident. Unresolved questions include: whatpercentage of, how long, and at what price ab-normal infants are institutionalized, and whatdiscount rate is most appropriate. Without suchinformation, an accurate CEA of neonatal in-tensive care is impossible.

In spite of these limitations, the economicanalysis presented in this case study does high-

light certain important aspects of the presentreturn on the investment in neonatal intensivecare. For example, care of the birthweight group1,000 g or less does not turn out to be cost effec-tive. The primary reason is that the small in-crease in the chance that a severely abnormal in-dividual in this birthweight group would sur-vive—an increase that occurred between 1960and 1970-75—outweighed, in economic terms,the fact that the odds of a normal survivor inthis group increased from 17 per 1,000 livebirths to 135 per 1,000 live births during thatsame period. Withholding care from all new-borns weighing 1,000 g or less to avert the ex-ceptional costs of the severely abnormal sur-vivors would take the lives of many potentiallynormal babies. Clearly, a decision to withholdcare from such infants would not be made oncost-effectiveness grounds alone. The consid-erations in this situation contrast with those in ahypothetical outcome, often discussed in thepast: Neonatal intensive care was not cost effec-tive because it resulted primarily in increasedsurvival of defective individuals. In that situa-tion, the hypothetical tradeoff was not betweennormal and abnormal survivors, but betweenfewer or greater numbers of defective survivors.Neither situation would be financially cost ef-fective for society, but the factors to be weighedare quite different in each.

The economic analysis in this case studyspeaks only to the question of whether neonatalintensive care is cost effective when comparedwith less intensive care of small or ill newborns.It does not address the larger question ofwhether such care is cost effective when com-pared with alternative programs to reduce thelevels of prematurity and other risk factors inthe population. The larger question would re-quire a separate analysis of the costs and effec-tiveness of socioeconomic initiatives and pre-natal medical care.

The question concerning the results that couldbe expected from trading off some intensivepostnatal care in favor of prevention-orientedprograms is one which has important racial im-plications. Our analysis of present utilizationand outcomes by race concludes that marked re-ductions in the availability of intensive care

Case Study #10: The Costs and Effectiveness of Neonatal Intensive Care . 7

would have a greater adverse impact on blacksthan on whites unless all correctable factors thatpredispose to low birthweight had previouslybeen dealt with. This result would be predicted,because the disproportionate number of blackbirths in the high-risk very low birthweightgroups accounts for virtually all of the black-white differences in neonatal mortality rates.Thus, it appears that medical care of the

newborn may be partially compensating for thesocioeconomic, nutritional, and other inequitiesthat play a large role in determining interracialdifferences in prematurity rates. For this reason,it is critical to be able to predict the result ofprograms aimed at reducing those inequities be-fore considering reductions in the availability ofneonatal intensive care.

DEFINITION OF NEONATAL INTENSIVE CARE

Neonatal intensive care is defined by theAmerican Academy of Pediatrics as the con-stant and continuous care of the critically illnewborn (4). This type of care involves manyindividual medical technologies, highly spe-cialized physicians and nurses, and proximity orlinkage to obstetric services.

Neonatal intensive care is typically deliveredin organized hospital units. The facilities de-livering neonatal care are classified into threegroups or levels, depending on the sophistica-tion and scope of the services the facilities areequipped and staffed to provide. The distinc-tions between the three levels blur considerablyin the field, however, and the definitional confu-sions that result substantially complicate col-lecting and analyzing data on costs and utiliza-tion.

History of Neonatal Intensive Care

In the early part of this century, most sicknewborns died within the first few hours of life.Premature newborns were not expected to livemore than a few days. In 1878, Dr. E. S. Tarnierinstituted the use of a “warming chamber’’—thefirst incubator—and was able to increase thechance of survival for a large number of pre-mature newborns (117). Similar machinery waswidely used in international expositions andlater became common at amusement park side-shows featuring “incubator babies. ” Eventually,incubators gained acceptance in the medicalcommunity and became standard equipment inmost hospitals with maternity services. As thesurvival period for premature infants length-ened, problems of nutrition and disease to

which such infants are prone became evident,and research on these problems began.

Facilities and medical techniques for care ofthe newborn have progressed most rapidly since1965 with the evolution of perinatal1 medicineand the development of associated medical tech-nology. Care provided the newborn has passedthrough many phases and now involves the useof highly technological diagnostic and thera-peutic techniques and sophisticated life-supportsystems.

Most newborn medical care problems arise inseverely premature2 infants and for that reason,a large part of neonatal intensive care consists ofusing machines and other therapies to compen-sate for the lack of full development of the in-fant. The most common technologies are res-pirators and positive pressure breathing devicesfor treatment of respiratory distress syndrome

1Perinatal: The period around the time of birth, now generallydefined as from 20 weeks of gestation up to 28 days of life.

Neonatal: The period from the moment of live birth up to butnot including the moment at which the infant completes the 28thday of life.

‘Premature infants comprise two groups: I ) infants who wereborn too soon (before the 38th week of gestation), but whoseweight and development are Appropriate for their Gestational Age(“preterm AGA”); 2) infants who were born early and who areunderdeveloped, or Small for their Gestational Age (“’pretermSGA”), due to intrauterine growth retardation. In addition, someinfants born at term (after 37 weeks gestation) are Small for theirGestational Age (“term SGA”) and have birthweights in the samerange as truly premature infants but are relatively more mature.Most of the literature relevant to this paper focuses on birthweightalone, and does not mention gestational age. Consequently, wewi]] most often use the terms “low birthweight ” (2,500 g or less) or“very low birthweight” (I, s00 g or less); when we use the term“premature, ” it is generally in reference to very low birthweight in-tants who may be SGA or AGA, but are most often preterm. Forease of reference, 2,500 g is approximately 5 lb 8 O Z, while 1,500 gis about 3 lb 4 oz.

—.


(RDS), also called hyaline membrane disease(HMD). 3 Once it was discovered and acceptedthat oxygen therapy can cause blindness in pre-mature infants, many new technologies weredeveloped to monitor more carefully the levelsof inspired and circulating oxygen. The oxygencontent of a premature infant’s arterial blood isoften measured several hundred times duringthe serious stages of illness. Newer techniquesthat monitor oxygen saturation continuouslyare now being used.

Other therapeutic and diagnostic innovationsare also highly technological. Intravenous hy-peralimentation, 4 advanced thermoregulatoryapparatuses, cardiac catheterization, and “mi-crochemistry” laboratory tests using onlyminute samples of infant blood are all asso-ciated with expensive, sophisticated machinery.Computerized ventilator systems may furtherrefine mechanical ventilation in the future (101).Technology and research made it possible totreat severe jaundice with “exchange” bloodtransfusions, representing a major break-through in neonatal care. More recently, theneed for this complicated and dangerous pro-cedure has been reduced by two other innova-tions: phototherapy (exposure of the jaundicedinfant to artificial light), and passive immuniza-tion of mothers at risk for Rh disease. Progressin the diagnosis of intracranial hemorrhage hasled at least one pediatric radiologist to recom-mend computer-assisted tomographic scans inthe first week of life for all babies weighing lessthan 1,500 g at birth (34).

Along with changes in neonatal intensive carehave come changes in the training of the physi-cians and nurses who deliver such care. Before1960, responsibility for the care of the newbornwas shared among general pediatricians, obste-tricians and general practitioners. In the early tomid-1960’s, pediatricians with special interest incaring for sick newborns began to specialize in

‘RDS is a clinical diagnosis of pulmonary immaturity; HMDwas originally a pathological diagnosis made at postmortem ex-am ination. The terms are now often confused and used inter-changeably. In this text, the}~ should be taken to reter to theclinical entity requiring neonatal medical care, unless otherwisespecified.

‘The intravenous administra ion CJ} nutrients.

early infant care, leading to the development ofneonatology as a pediatric subspecialty (111).By 1979, 835 neonatologists had been certifiedby the American Board of Pediatrics since thefirst exam was held in 1975 (6). Although 200neonatology training programs exist in thecountry today, none is subject to formal ac-creditation (6).

Levels of Neonatal Intensive Care

Hospitals delivering neonatal intensive careare generally separated into three levels basedon the intensity of care each is equipped andstaffed to provide. Level I hospitals provideminimal or normal newborn care, Level II hos-pitals are those considered to provide inter-mediate care, and Level III hospitals are thoseconsidered to provide the most intensive care ofthe three levels.

Definitions of the three levels of neonatal careare found in the recommendations of the 1976report of the Committee on Perinatal Health(32) and in the 1977 report of the AmericanAcademy of Pediatrics (4).5 These recommenda-tions were developed as guidelines for theregional development of perinatal health serv-ices. The definitions of each level are brieflysummarized below.

Level I hospitals are those “whose function isto provide services primarily for uncomplicatedmaternity and newborn patients, and those withminor complications” (32). Level I hospitalsmust also be able to provide for detection andidentification of existing and potential prob-lems. Their emergency services may includesome forms of temporary intensive care tech-niques to manage unexpected complications be-fore the patient can be transferred to a higherlevel facility. Level I hospitals also include nur-series able to provide supportive or recoverycare for infants transferred back from Level II orIII units after the infants’ acute problems havebeen resolved.

5The American Academy of Pediatrics was a participant on theCommittee on Perinatal Health, but had published a separate setc~f recommendations and standards prior to the Committee report,Although the recommendations are virtually identical, the pres-entations differ,

Level II hospitals are those that can “providea full range of maternal and neonatal servicesfor uncomplicated patients, for the majority ofcomplicated obstetrical problems, and certaintypes of neonatal illnesses” (32). Infants treatedin a Level II intermediate care unit may includethose with mild RDS, unstabilized respiratoryfunction (periodic apnea), hyperbilirubinemia(jaundice), hypoglycemia, and superficial andlocalized infections. In addition to all the serv-ices of a Level I hospital, Level 11 hospitals pro-vide more 24-hour services, more sophisticatedequipment, and more medical personnel trainedin specialized care of the newborn.

Level III hospitals have intensive care unitswhich “must be able to provide the full range ofresources and expertise required for the manage-ment of any complication of pregnancy or of thenewborn” (32). Level III units in hospitals withobstetric services have facilities for extremely illinfants born in the hospital or transported fromsurrounding regions and facilities for moderate-ly ill and normal infants. In addition to servingas referral centers, these hospitals provide con-sultation services, conduct continuing educationprograms, and coordinate and direct transportof referred patients. Transport can also be clas-sified as a special care service by itself. Trans-port of a sick newborn requires specialized, por-table equipment to provide care, and trainedmedical and nursing staff to manage the move.

The major difference between the services of aLevel II unit and those of a Level III unit is theLevel III unit’s capacity for continuous and con-stant long-term intensive care and immediateavailability of subspecialty consultants in fieldssuch as cardiology and surgery. Level III serv-ices include continuous cardiopulmonary sup-port and capability to treat those infants re-quiring long-term intravenous therapy, hyper-alimentation, major surgery, and treatment ofsepsis (widespread infection).

Definitional Problems

The terminology for defining levels of care,unfortunately, is not precise. A Level IIIhospital, for example, is generally expected toprovide care at all levels of intensity. Such a

hospital might have as many as four nurseryunits: normal newborn, continuing care, in-termediate care, and maximal care. In that case,only the maximal care site might be called the“neonatal intensive care unit” (NICU). Morecommonly, however, levels would be combinedinto one or two units, so that the NICU wouldinclude all but the normal newborn area.Moreover, Level III hospitals generally haveLevel II and Level I beds, as well as Level 111beds. Level II hospitals often refer to theirnewborn special care center as a “neonatal in-tensive care unit, ” and may claim to have someLevel III beds.

Neonatal services in many hospitals do notreflect the three defined levels of care. The rapidadvancement of medical technology, escalatingcosts of medical equipment, training require-ments for medical personnel, and a rush to ap-ply new knowledge with minimal planning toguide development has led to a diversity of serv-ices provided at various hospitals offering neo-natal care in a region. As a consequence, theservices provided in different facilities classifiedat the same level can vary considerably, makinga standard level of care difficult to define inpractice.

The diversity of services, personnel, andequipment has several causes. In some areas,one or two pediatric subspecialists might beavailable at a Level II hospital enabling certaininfants to be cared for at that facility. Similar in-fants would require transport from a Level IIunit without the same subspecialists to a LevelIII unit. Also, a hospital may maintain special-ized equipment (e. g., a newborn mechanical res-pirator) which is not required for the facility’sdesignated level, but which allows that hospitalto provide a service normally performed at ahigher level facility, In addition, a hospital mayattempt to treat most serious neonatal problemseven though the facility may not include one ormore of the ancillary services or subspecialtyconsultants recommended for Level III hospitalsby the Committee on Perinatal Health (32).

Regulatory programs and reimbursement pol-icies further complicate the definitional prob-lems by creating incentives for hospitals to

10 . Background Paper #2: Case Studies of Medical Technologies

classify their units inappropriately. For exam-ple, ratesetting programs may be more likely toapprove higher rates for a Level III unit than fora Level 11 unit. Certificate-of-need programs,however, may apply very restrictive criteria toLevel III facilities while not even recognizingLevel II nurseries as special units (23).

Additional confusion results from the lack ofagreement among hospitals, professional medi-cal groups, State planning, regulatory and fund-ing agencies, and the Department of Health andHuman Services (DHHS)6 on a uniform defini-tion of each level of care. This confusion is evi-dent throughout the country. A 1979 report pre-pared for the Health Resources Administrationof the Department of Health, Education, andWelfare (HEW) (113) showed that only 12 of 33States with certificate-of-need programs re-sponding to a survey had published standardsfor obstetrical and neonatal care; 9 States pro-vided no definitions for Level I neonatal care; 5States provided no definitions for Level II neo-natal care; and 5 States provided no definitionsfor Level III neonatal care. Many of the defini-tions were the same as those used for obstetricalstandards. Moreover, State standards for re-source requirements (e.g., neonatal bed supply,occupancy rate, volume of deliveries, and traveltime), service requirements (e.g., special labora-tory tests and anesthesiology), and personnel,consultation, and facility requirements rangedfrom general policy statements to detailed speci-fications.

Not only are the definitions sparse and in-adequate to characterize most existing facilities,but there is no uniform application of the stand-ards that do exist. A 1978 HEW study of the Na-tional Guidelines for Health Planning (82) notedthat “responsibilities for setting and monitoringstandards related to Levels I, II, and III wereunknown or not yet formalized in 30 States, ”and only 4 States used licensure and certificate-of-need authorities to ensure adherence tospecific standards.

“The Department of Health and Human Services (DHHS) is thenew name of what was former y the Department of Health, Educa-tion, and Welfare (HEW). The new name, which reflects the trans-fer of most of HEW’s education programs to a separate Depart-ment of Education, became 01 ficial on May 7, 1980. Both namesare used in this paper.

Data Collection Problems Based onDefinitional Confusions

The absence of uniform standards has compli-cated data collection and has made comparativestatistical analysis difficult, especially whencomparing cost or utilization data for differenthospitals. For example, a certain facility maybeclassified as a Level III hospital because it main-tains long-term mechanical respirators and isstaffed and equipped to provide treatment forthe most seriously ill infants, even though itdoes not accept transports from the region andmay not provide consultation, continuing edu-cation, or transport facilities for lower level hos-pitals within its region. The cost data for serv-ices rendered by this Level 111 hospital could notbe directly compared to those of a Level 111 hos-pital meeting the Committee on PerinatalHealth’s definition for a Level 111 facility, be-cause the two facilities would not have the sameoverhead for equipment and personnel. Also,utilization data would only reflect infants bornat that particular hospital. On the other hand, afacility may be classified as a Level 11 hospitaleven though it can provide treatment for mostserious neonatal illnesses and contains someequipment designated as necessary for a LevelIII hospital. If any comparable data are to beobtained for neonatal intensive care, the classifi-cation system must accurately reflect the treat-ment modes, the types of personnel, and the pa-tient population served.

These definitional problems are evident in themajor surveys undertaken to obtain data forneonatal care. Even the most basic data, such asthe number of neonatal intensive care beds inthe country, cannot be corroborated by the twoindependent surveys done to date (6,7,8,14 ).7

Several State surveys of NICUs have alsobeen conducted, but these are generally limitedto the data collected, and they suffer fromnumerous definitional ambiguities.8

One State has made an attempt to avoid con-fusion and to describe accurately services being

‘These surveys of the supply of NICU beds are discussed belowin the part of this case study on utilization of neonatal intensivecare.

“The available State data are presented below in the part of thiscase study on util izat ion of neonatal intensive care.

Case Study #10: The Costs and Effectiveness of Neonatal lntensive Care ● 11

provided at existing facilities by developing aunique approach to classifying NICUs. TheState Advisory Committee on Perinatal Care ofthe Maryland Department of Health and MentalHygiene (78) has rejected the idea of hospitalclassification by level of care, and instead hasdrafted standards for patient care situations’ tobe dealt with at each nursery. Thus, if a hospitalhas the equipment and staff deemed necessary tohandle a particular situation, then it can providethe services regardless of whether it qualifies asa Level I, II, or III facility. Maryland then de-fines an NICU as being able to provide for anyneonatal patient care situation, but does notspecify that the hospital maintain all the fa-cilities recommended by the Committee on Peri-natal Health. The State approved these stand-ards for neonatal intensive care in June 1978,but the data collected have not yet been ana-lyzed. Unfortunately, although this may repre-sent a future model for other States, the initial

‘An example of a specific patient situation might be a newbornof 37 or more weeks gestation, requiring less than 40 percent oxy-gen for less than 24 hours.

reports from Maryland will be difficult to com-pare with reports from other States because ofthe lack of consistent definitions used elsewhere.

Summary

Because of ambiguities in commonly used def-initions, we adopt in the present study a broadconcept of what constitutes neonatal intensivecare, i.e., we consider neonatal intensive care tobe the care provided infants in Level III or LevelII nurseries. Ideally, one would analyze onlyLevel 111 nurseries. As we have seen, however,that approach would leave out a significantamount of high-technology, truly intensivecare. Furthermore, it is necessary to includeboth Levels II and III, because data on costs,utilization, and effectiveness are often not sepa-rated by the intensity of care provided. Al-though neonatal intensive care generally is, andpreferably should be, practiced as part of a com-prehensive perinatal care system, we consider inthis study only the neonatal aspects of intensivecare.

INFANTS RECEIVING NEONATAL INTENSIVE CARE: FACTORSINFLUENCING PRESENT AND FUTURE DEMAND

Birthweight

Birthweight is the most important predictorof illness or death in early infancy (73). The neo-natal mortality rate is, in general, directly re-lated to the incidence and severity of pre-maturity. Mortality among low birthweight in-fants, those weighing 2,500 g or less, rangesfrom nearly 100 percent for newborns of birth-weights less than 750 g (about 1 lb 10 O Z) to ap-proximately 10 percent for newborns of birth-weights between 2,000 to 2,500 g (4 lbs 7 oz to 5lbs 8 oz)(28). Newborns weighing 1,500 g (3 lbs4 O Z) or less, the very low birthweight infants,are an important subgroup, because althoughthey represent only 1 percent of the newbornpopulation, they account for nearly half of allinfant deaths. Some 230,000 low birthweight in-fants are born annual] y (see table 1).

Prematurity

Conditions associated with prematurity arethe most common reasons for the provision toinfants of neonatal intensive care. The numberone problem for premature infants, by a consid-erable margin, is RDS. Nearly 20 percent of allneonatal deaths are caused by this disorder,which is primarily due to the infant’s being bornbefore the lungs are ready for breathing air.Highly technological methods for keeping new-borns alive while their lungs mature are the ma-jor components of neonatal intensive care.

RDS increases in incidence with the degree ofprematurity. In a large study done in Norway(106), RDS was diagnosed in 5.5 percent ofneonates of less than 32 weeks gestation; 2.7percent of those of 32 to 35 weeks; and 0.3 per-cent of those of 36 to 38 weeks gestation. Be-


Table 1.— Birth Rate, Fertility Rate, and Total Number of Births, 1975.79

1975 1976 1977 1978 1979a

Birth rateb. . . . . . . . . . . . . . . . . . 14.8 14.8 15.4 15.3 15.8Fertility rate c . . . . . . . . . . . . . . . 66.7 65.8 67.8 66.6 68.0Total births. . . . . . . . . . . . . . . . . 3,144,198 3,167,788 3,326,632 3,333,279 3,473,000

2,500 g or less . . . . . . . . . . . . 231,627 229,375 234,884 236,342 N Ad

1,500 g or less . . . . . . . . . . . . 36,297 36,449 37,602 38,752 NAd

aProvisionalbBirths/1,000 population.cBirths/1,000 women 15 to 44 years of agedNot available as of December 1980.

SOURCES 1975 data—National Center for Health Statistics, Monthly Vital Statistics Reporft Final Natality Statistics, 1975, HEW publication No (HRA) 77-t 120, VOl.25, No 10, suppl., Dec. 30, 19761976 data— National Center for Health Statistics, Monthly Vital Statistics Report, Final Natality Statistics, 1976, HEW publication No (HRA) 78-1120, Vol.26, No 12 (suppl.), Mar 29, 19781977 data—National Center for Health Statistics, Monthly Vital Statistics Report, Advance Report, Final Natality Statistics, 1977, HEW publication No(PHS) 79.1120, vol. 27, No. 11, suppl. , Feb. 5, 1979.1978 data— National Center for Health Statistics, Monthly Vital Statistics Report, Advance Report, Final Natality Statistics, 7978, HEW publication No(PHS) 80-1120, vol. 29. NO. 1, suppl., Apr. 28, 19801979 data—National Center for Health Statistlcs. Monthly Vital Statistics Report, Provisional Statistics, Annual Summary for the United States, 1979, DHHSpublication No (PHS) 81.1120, vol. 28, No 13, Nov. 13, 1980

tween 1968 and 1972, RDS-related infant mor-tality increased somewhat. Since 1972, how-ever, the mortality from RDS has decreased bynearly 30 percent (90).

In addition to those with diagnosed respira-tory disease, a number of premature will diewithout a specific disorder other than im-maturity. This group accounts for over 10 per-cent of all neonatal deaths and often receives in-tensive care. Over the past 10 years, the mor-tality rate for the International Classificationof Diseases category “immaturity, unqualified”has experienced a steady decline, from 2.69deaths per 1,000 live births in 1968 to 1.11deaths per 1,000 live births in 1977 (91). Thischange could be due in part to improved specifi-cation of diagnoses, but no study of such a trendhas been identified.

RaceSince 1966, there has been a 15-percent de-

cline in the overall incidence of low birthweightas a proportion of all births (see table 2). Thisdecline is associated with improvements in someof the risk factors predisposing to prematurity.Major risk factors for prematurity include raceand age of mother, socioeconomic level, andmaternal nutrition and health practices. Race isa serious risk factor, because blacks are far morelikely to have low birthweight infants thanwhites (see table 3). Although blacks accountfor only about 16 percent of all births, they ac-count for more than one-third of the very lowbirthweight infants. Moreover, the rate of verylow birthweight infants has not declined in re-cent years (see table 3). Because of the vast dif-ferences in very low birthweight rates, blacks

Table 2.–Percentage of Low and Very Low Birthweight Infants Among All Births, by Race, 1950-77— . ———— —..—.—

1950 1956 1960 1966 1970 1971 1972 1973 1974 1975 1976 1977Percentage of low birth weight infants (

Case Study #10: The Costs and Effectiveness of Neonatal Intensive Care ● 13

Table 3.— Low and Very Low Birthweight Rates, by Race, 1950-77

1970-77net

1950 1956 1960 1966 1970 1971 1972 1973 1974 1975 1976 1977 change

Low birth weight ratea (


Congenital heart diseases present the largestgroup of congenital anomalies, accounting forover 5 percent of all neonatal deaths in 1977(87). The development of surgical techniques forcuring or ameliorating many previously fatalcongenital heart defects has revolutionizedtreatment of these conditions over the past 10 to15 years. The infants on whom surgery is per-formed are generally cared for in NICUS bothpreoperatively and postoperatively. The neo-natal mortality rate for congenital anomalieshas also shown a steady decline over the pastdecade, from 2.14 deaths per 1,000 live births in1968 (85) to 1.79 deaths per 1,000 live births in1977 (87).

Other serious problems treated in neonatal in-tensive care units include diarrhea and mal-absorption diseases, meningitis, hemorrhagicdisease of the newborn, idiopathic jaundice ofthe newborn, and septicemia (blood poisoning).Certain risk factors associated with many ofthese neonatal problems have been improving inrecent years, although a few have been gettingworse.

The identification of risk factors associatedwith neonatal mortality and morbidity has ledto interest in programs aimed at preventingnewborn disease. Some risk factors, such asmaternal socioeconomic status, require complexand costly interventions with uncertain benefits,and are addressed through welfare, education,and job programs. Other risk factors can betraced to specific maternal illnesses or behavior,or to events occurring during the prenatalperiod. For example, smoking and alcohol anddrug abuse can cause intrauterine growth retar-dation and a number of necrologic and meta-bolic disorders. These factors have direct causallinks with certain newborn problems and mightallow for targeted interventions with reasonablypredictable benefits.

Because so many of the problems of the new-born are associated with maternal factors thatcan be detected during pregnancy by routineprenatal care and the use of specialized diag-nostic procedures, about two-thirds of infantswho will require special care can be identifiedbefore birth (4). Unfortunately, such screening

is costly and has high false-positive and false-negative rates. In other words, some high-riskwomen will deliver normal infants, while somelow-risk women will produce sick ones.

Maternal Age

The incidence of abnormal birth can be di-rectly related to maternal age. Mothers over theage of 35 have an increased risk of havingfetuses with genetic malformations and of ex-periencing fetal death in utero (84). A strongcorrelation exists between pregnancies in olderwomen and the incidence of Down’s syndrome(mongolism) (12). Older mothers are also morelikely to produce a low birthweight baby, butthey contribute an insignificant proportion ofthis risk group. Between 1950 and 1977, birthrates for mothers aged 35 to 39 have declined bytwo-thirds, from a rate of 60 per 1,000 womenin that age group to less than 20 per 1,000. Birthrates for mothers aged 40 to 45 have also de-clined, from 15 per 1,000 to less than 3 per1,000 (92).

Teenage pregnancy also produces infants athigh risk. Very young mothers commonly havehypertension of pregnancy, premature labor, ora small pelvis contributing to birth injury (4).Mothers under 15 years old have the highest riskof any group for producing a low birthweightbaby (84). This group of mothers remains small,with very low birth rates, and accounts for onlyone-third of 1 percent of births (86). Amongslightly older teenagers 15 to 17 years old, thenumber of births rose by over 20 percent be-tween 1966 and 1975 (86), but has since fallenby nearly 11 percent, to pre-1970 levels.

Prenatal Care

Several studies have tried to assess the role ofprenatal medical care in determining the out-come of pregnancy (42,50). unfortunately, itproves difficult to separate prenatal care fromthe other factors that influence outcomes. A re-cent analysis based on relatively old (1968) datafor New York City suggested that if prenatalcare exerts any effect on infant mortality, it islikely that it does so by reducing the incidence oflow birthweight newborns (50), It has also been

Case Study #10: The Costs and Effectiveneness of Neonatal lntensive Care ● 15

reported that the greatest risk of having a lowbirthweight baby comes from pregnancies withno prenatal medical care (42).

Only a small number of pregnancies in theUnited States are now at risk due to inadequateprenatal care, and the proportion of pregnancieswith inadequate prenatal care has been de-clining in recent years. In States reporting to theNational Center for Health Statistics, the per-centage of pregnancies with late prenatal care10

or no prenatal care fell from 8.1 to 6.0 percentbetween 1969 and 1975 (89). Much of the de-cline represented major increases in access toprenatal care by blacks, among whom inade-quate prenatal care fell from 18.2 percent in1969 to 10.5 percent in 1975 (89).

Medical Practices

Finally, risks have also been associated withmedical practices such as electronic fetal moni-toring (11), amniocentesis, cesarean section,

‘°Care initiated in the third trimester of pregnancy

and induced labor (77), all of which are be-coming more common. Between 1971 and 1975,the cesarean section rate in the United Statesnearly tripled, from 5.5 percent of births to 15.2percent (100). In California alone, 15.4 percentof births in 1977 were delivered by cesarean sec-tion, a greater than threefold increase from the5.1 percent rate in 1965 (131). The aforemen-tioned medical practices could result in morepremature births, but it is not yet clear whetherthey will increase or decrease the need for inten-sive care in the newborn period. If early de-livery after signs of fetal distress does indeed re-duce the incidence of complications such asasphyxia, less care after birth might be neces-sary. This could partially offset the increaseddemand likely to result from the current “babyboom. ” Studies on the impact of fetal moni-toring, however, do not appear to justify anyhope for a dramatic reduction in the demand fornewborn intensive care. The main determinantof the demand for intensive newborn care willprobably be the duration of the present increasein the birth rate and the total number of births.

UTILIZATION OF NEONATAL INTENSIVE CARE

No national data that describe the amount ofnewborn intensive care now being provided inthe United States are available. Rough estimatescan be computed, however, by extrapolatingfrom the data that are available. The estimatesare necessarily rough because of definitional in-consistencies in the data that are available andsmall sample sizes on which the data are based.As noted earlier, the definition of what con-stitutes an NICU varies from study to study,and reports often fail to separate units by levelof care. More importantly, however, the ex-isting data are based on limited experience,often in small geographic areas with small or re-stricted population samples, and case-mix sever-ity is not controlled.

We calculated the following estimates of neo-natal intensive care availability and use in theUnited States based on utilization data availablein the literature and submitted by individualnurseries:

● NICU admission rates: 6 percent of all livebirths go to intensive care (about 200,000admissions annually, range 3.8 to 8.9 per-cent of all births).

● Estimated ALOS: 8 to 18 days per patient(mean 13).

● Estimated total patient days: 2.6 million.● Number of hospitals with NICUs: approxi-

mately 600.● Number of intensive care beds (Levels II

and III): 7,500 (approximately 2.3 beds per1,000 live births).

The data we used and the manner in which wearrived at these estimates are discussed in thesections below.

NICU Admission Rates

Admission rates for NICUs vary according toavailability of facilities, staffing capabilities,physician referral patterns, and risk factors


present in different areas. Data from three largepopulation-based studies and reports from fiveindividual neonatal centers are summarized intable 4.

The range of NICU admission rates across thethree population-based studies shown in table 4is substantial and is probably part real and partan artifact of reporting procedures. The NewYork City area has a number of factors asso-ciated with high-risk pregnancies: a large blackpopulation, high prematurity rates, and a highincidence of inadequate prenatal care. Becauseof reporting vagaries, the figure reported forNew York City could be as low as 7.5 percent,still considerably above the figures for Ohio andCalifornia. Less than 4 percent of Ohio’s birthsand just under 6 percent of California’s birthsreceived intensive care in the newborn period.These figures reflect Ohio and California’slower rates of prematurity and other risk factors(13). When data for all three regions are com-bined, the weighted average admission rate isabout 5.9 percent (see table 4). The sources ofthis figure are quite disparate. However, the factthat it is based on over 20 percent of all births inthe United States makes 6 percent seem a rea-sonable estimate for the country as a whole.Level 111 referral hospitals consistently reportedhigher NICU admission rates than the large pop-ulation surveys, with rates ranging from lessthan 10 percent to more than 20 percent of allbirths (see table 4). These hospitals have rela-tively high-risk inborn populations because theyserve as regional per]. natal referral centers.

These figures only reflect current practice,and they are not necessarily indicative of idealpatterns of care. It is not possible to concludewhether or not the present levels of utilizationare appropriate, because the limitations of cur-rently available data make it impossible to ana-lyze the reasons for the wide discrepancy in uti-lization. The American Academy of Pediatrics(5) has estimated that 9 to 11 percent of all livebirths would require special care—2 to 4 percentat the intensive level and 7 percent at the inter-mediate and continuing care levels. This figurehas been widely cited even though it was simplya consensus approximation by members of theManpower Subcommittee of the Academy’sCommittee on the Fetus and Newborn. Clearly,admission rates will vary with the incidence ofvery low birthweight infants in a population,but it is not yet reasonable to attempt to defineprecise, ideal utilization rates for different fre-quencies of prematurity y.

Length of Stay

Estimating ALOS is even more difficult thanestimating NICU admissions. In addition to theproblems associated with differential risk fac-tors and a lack of comparable definitions, exten-sive transfers of infants in and out of hospitalsand among beds and units of different intensitylevels causes double counting of the same in-fants. The literature and our estimate maytherefore underestimate ALOS and, correspond-ingly, overestimate admission rates.

Table 4.—NICU Admission Rates, 1975-78

Region or hospital and yeara Births NICU admissions Percentage of births

Large surveysSouthern District New York State, 1977 (76) . . . . . . . . . . . . . . 1 3 1 , 8 3 4 1 1 , 1 2 8 8 . 4 %California, 1977 (24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347,426 20,551 5.9Ohio, 1977 (103) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,850 6,058 3.8

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640,110 37,737 5 . 9 %Individual centersb

UCSF Medical Center, 1976-77 (99). . . . . . . . . . . . . . . . . . . . . 1,921 276 14.4 ”/0University of Washington, 1978 (60). . . . . . . . . . . . . . . . . . . . . 1,500 317 21.0Bellevue Hospital, 1975-76 (43). . . . . . . . . . . . . . . . . . . . . . . . . 612 88 14.4Brooklyn Hospital, 1975 (43) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,485 263 10.6Milton S. Hershey Medical Center, 1977-78 (55) . . . . . . . . . . . 1,350 300 22.2

aNumbers in parentheses refer to references in the list that appears at the end of this case studybNICU admissions include in born babies only (no transfers)

Case Study #10: The Costs and Effectiveness of Neonatal intensive Care ● 17

On the basis of the available data collectedfrom individual NICUS (25,54,55,60,76,94,97,98,103,122), and the Children’s Hospitals Auto-mated Medical Programs (29), we estimated anALOS of 8 to 18 days (mean, 13 days) per pa-tient in Level II and 111 nurseries combined.Because of the problem of double counting oftransferred infants, however, utilization ofNICUS can better be expressed in terms of totalpatient days, number of beds, and occupancyrates (as shown below).

To summarize, ALOS varies widely from oneState to another, among hospitals, by birth-weight, and by diagnosis. Data from the ab-stracting service for children’s hospitals shownin table 5 demonstrate the variation in ALOS bydiagnosis. Data for different NICUS are sum-marized in table 6; those for different regionsare summarized in table 7.

Table 5.—Average Length of Stay (ALOS) inChildren’s Hospitals, by Diagnosis, 1976-77

ALOS (in days)

Diagnosis 1976 1977

HMD/RDS . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3 18.5Immaturity . . . . . . . . . . . . . . . . . . . . . . . . . 29.8 29.6Asphyxia. . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 15.9

SOURCE: Data in this table were supplied by the Children’s Hospitals Auto.mated Medical Programs (CHAMP), Columbus, Ohio (29) Any anal-YSIS, interpretation, or conclusion based on these data or any otherdata cited elsewhere in this study as having been supplied by CHAMPis solely that of the Health Policy Program CHAMP specifically dis-claims responsibility for any such analysis, Interpretation, or conclu-sion.

Total Days of Care

The total number of days of intensive care inNICUs for the United States can be approx-imated by multiplying estimated NICU admis-sions by estimated ALOS. Applying an esti-mated NICU admission rate of 6 percent to thenumber of live births registered in the United

Table 6.—Average Length of Stay (ALOS), by Hospital

Hospital and yeara Admissions Patient days ALOSb (in days)

University of Washington Hospital, Seattle, 1978 (60) . . . . . . . . . . . . . . 461 9,128 19.8c

Children’s Orthopedic Hospital, Seattle, 1978 (60). . . . . . . . . . . . . . . . . 407 7,326 18.0Hospital for Sick Children, Toronto, Canada, 1978 (122)d . . . . . . . . . . . . — 17.oeUCSF Medical Center, 1978 (98) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,185 — 14.8Milton S. Hershey Medical Center, Pennsylvania State

University, 1977 (55) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 8,485 16.1Milton S. Hershey Medical Center, 1978 (55). . . . . . . . . . . . . . . . . . . . . . 475 9,358 19.7

aNumbers in parentheses refer 10 references in the list that appears at the end of this case studybTotal stay for Levels II and Ill combinedcSurvivors, 22 days (83.7%), nonsurvivors, 85 days (16.3%)dSwyer reports ALOS was similar at McMaster University Medical Center and Emory University in Canada for the same YeareALOS for infants admitted directly to Level II is 7 days

Table 7.—Average Length of Stay (ALOS), by Region

Region and yeara Admissions Discharges Patient days ALOS (in days)

Southern District of New York State, 1977 (76). . . . . . . . . . . . . . . – 9,867 170,233 17.3b

15.3C

Ohio, 1978 (103) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,058 — 129,013 21.3California, 1977 (26). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 20,551 178,744 8.7California, 1972-73 (54) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,863 — — 10.8

d

11 .3e

Massachusetts, 1976 (94) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 12.9d

Pennsylvania, 1977-78 (97) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 11.8

aNumbers in parentheses refer to references in the Iist that appears at the end of this case studybBased on reported dischargescBased on the larger of admissions of discharges where discrepancies exist n hospital reports to the United Hospital Fund of Greater New York‘Level Ill‘Level II


States for 1978, 3,329,000 (79) yields as the totalnumber of newborns requiring intensive care in1978 approximately 200,000. If one uses an ap-proximate ALOS of 13 days, total patient days(admissions x ALOS) would be 200,000 X 13= 2,600,000. This total, 2,600,000 days, would

represent approximately 0.7 percent of the U.S.total of hospital days for 1978 (380,152,083total hospital days) (32).

Supply of NICU Beds

A limited number of surveys of NICU facil-ities are currently available (see table 8). Theresults are contradictory and are difficult toreconcile.

Table 8.—Supply of NICUs and Beds inthe United States, 1976-78

A H A M F I S R O S S

1976: 6,500 hospitals reportingNumber of hospitals with premature

nursery facilities . . . . . . . . . . . . . . 1,923 2,017 —Number of hospitals with NICUS. . . 529 540 –Number of hospital beds used for

neonatal intensive care,. . . . . . . . . 6,602 6,668 —


nursery facilities . . . . . . . . . . . . . 1,821 2,014 —Number of hospitals with NICUS. . . 591 655 –Number of hospital beds used for

neonatal intensive care. . . . . . . . . 7,553 7,792 —


nursery facilities . . . . . . . . . . . . . . 1,726 NA —Number of hospitals with NICUS. . . 448 NA 259Number of hospital beds used for

neonatal intensive care. . . . . . . . . 6,252 NA 7,387

NA = not available

SOURCES 1976 data: AHA (7), MFIS (79)1977 data AHA (8), MFIS (79).1978 data: AHA (9), Ross (14).

The American Hospital Association’s (AHA)Annual Survey of Hospitals counted NICUs andbeds for the first time in 1976, and reported theresults in 1977 (7). The 1977 (8) and 1978 (9)surveys have now been published, as well. Theapparent increase and decline in NICU supplyover those 3 years cannot be explained by AHA

staff with confidence, although the pattern maysimply reflect the vagaries of the first years ofreporting a new survey item.

The AHA figures reflect all hospitals in theUnited States except the 200-plus institutionsthat are not registered with AHA. In its MasterFacility Inventory Survey (MFIS), the NationalCenter for Health Statistics uses AHA surveyresults and adds an estimate for the hospitalsthat are not registered (79).

AHA has not yet separated NICUs into dif-ferent levels, although it had intended to do soin the most recent survey, Thus, AHA and MFISfigures should include all NICUs and all NICUbeds at every level of intensity.

Ross Laboratories, which surveyed only Level111 regional referral centers, counted virtuallythe same number of NICU beds as AHA in onlyhalf the number of hospitals (14). Althoughcounting beds is complicated by differencesamong beds in use, licensed beds, and speciallydesignated NICU beds, Ross tried to report thestandard number of infant positions normallyaccommodated in the neonatal units surveyed.A 1980 update of this survey should be availablesoon.

Since the discrepancies among the reportsshow no consistent pattern (see table 8), the re-lationship between the Ross data and AHA andMFIS reports cannot be determined. Moreover,none of the published national surveys haspublicly identified individual hospitals, makingit impossible to cross-check the results directly.

Our estimate of 7,500 beds was reached bycombining the results of the bed surveys (seetable 9) with the estimated number of days ofcare being provided. That is, our estimate of 2.6million patient days would require 7,500 beds ata 95-percent occupancy rate ([2,600,000/(365x 7,500)] = 0.95). Our estimate of 7,500 beds

is, in fact, a conservative figure. If the Ross dataaccurately portray the number of beds in Level111 hospitals alone, the national total for bothLevels II and III could be closer to 14,000 beds.

Case Study #10 The Costs and Effectiveness of Neonatal Intensive Care ● 19

Table 9.—Number of NICU Beds in the United States

Number of Number of beds

Survey and yeara hospitals with NICU Maximum care Intermediate care Total Beds/hospital

CaliforniaRoSS, 1978 (14) . . . . . . . . . . . . . 28 330 394 724 25.9MCH, 1976 (53). . . . . . . . . . . . . 23 (of above) 192 221 413 18.0OSHP, 1977 (25). ., . . . . . . . . . . 23 (of above) — — 467 20.3MCH, 1976 (53). . . . . . . . . . . . 43 236 308 544 12.7OSHP, 1977 (25). . . . . . . . . . . . . 54 — — 697 12.9

OhioROSS , 1978 (14) . . . . . . . . . . . 9 142 202 344 38.2SDH, 1978(103)). . . . . . . . . . . . . 17 — — 472 27.8

MassachusettsRoss, 1978 (14) . . . . . . . . . . . . . . 6 65 47 112 18.7SHP, 1979(94) . . . . . . . . . . . . 8 95 69 164 20.5

New YorkRoss, 1978 (14) . . . . . . . . . . . 21 (15-NYC area) 292 468 760 36.2UHF/NY, 1978 (75) . . . . . . . . . . . 27 (NYC area) — — 505 18.7UHF/NY, 1978 (75) . . . . . . . . . . 14 (of 15 above) — — 392 28.0

WashingtonROSS, 1978 (14) . . . . . . . . . . . . . . 4 52 38 90 22.5UW, 1978 (60) . . . . . . . . . . . . . . . 6 71 39 110 18.3

aNumbers in parentheses refer to references in the Iist that appears at the end of thIs case study

COSTS OF NEONATAL INTENSIVE

The costs of neonatal intensive care are great.Among patients with high cost hospitalization($4,000 or more in 1 year) studied by Schroeder,et al. (112), neonatal cases were by far the mostexpensive, averaging over $20,000 each. In fact,neonatal costs were higher than those for neo-plastic and circulatory diseases, two of the mostexpensive adult services. They were similar tothe total cost of end-stage renal disease and cor-onary bypass surgery, both of which requirespecific costly medical technology. Various re-ports of neonatal intensive care costs range from$1,800 to $40,000 per patient. We estimate aver-age expenditures in 1978 to be about $8,000 percase. In the United States as a whole, thisamounts to approximately $1.5 billion (19,98).

Findings and Limitations of Cost Data

Cost data are plagued with even greater prob-lems than are utilization and supply data.NICUS are often not separate cost centers inhospital reports, but are mingled with otherintensive care or pediatric services. Even whenthe units are identifiable cost centers, the costs

CARE

that generally are reported exclude so-called“ancillary services” such as laboratory tests, X-rays, and physician fees. Since diagnostic andtherapeutic services are a major part of the totalcosts of caring for neonatal patients, such fig-ures greatly underestimate per capita costs.Total costs per patient are not readily accessibleexcept from the limited number of special stud-ies that have been undertaken (see table 10). Inorder to compare nurseries studied at differenttimes, we have updated many of the figures to1978 dollars, as specified.

Many of the data report hospital charges thatmay not in any way reflect actual costs. Hos-pital charges allocate overhead and other costsnot directly attributable to an individual patientaccording to reimbursement practices and over-all institutional revenue targets. 11 Moreover,most States do not require uniform accounting,and comparability among hospitals is limited asa result.

Additional problems arise because costs for

‘ ‘See section below on reimbursement for neonatal intensivecare.

20 ● Background Paper #2 Case Studies of Medical Technologies

Table 10.—Summary of Cost Studies on NICUs

Average cost Average cost Total costStudy a/year/population Characteristics of data per day updated to 1978 per patient

Cotton, Vanderbilt University, 1, 2 $700 NS $832 NS $5,691 STerm. (33) 4—No information if the charges $2,966 NSo 1976, 3 months cover both S & NS. Also all but● S & NS 8.3% of total was spent on S.

4— Nothing on cost/charges perpatient care or ALOS for S.

Kaufman & Shepard, Tufts New 1, 2 $345 Ill $345 IllEngland Medical Center, Mass.

—

(66). 1978● Level I I I services

Kaufman & Shepard, 2 $188 I $188 IJohns Hopkins, Md. (66)

—$200 II $200 II

● 1978 $340 Ill $340 IllKaufman & Shepard, Women & 1 $74 I $74 I —Infants Hospital, R.I. (66) $130 II $130 II —. 1978 $175 Ill $175 Ill —

Hawes, 19 tertiary NICUs & 1 1, 3a, 3bcommunity (Ii) hospital, 4—Total costs/charges will be $123 IICal if. (54) underestimated since over 50% $198 Ill● 1973 of infants were transferred and● 54‘io of 6,863 admissions were some 12 of the 20 hospitals are

transfers returning babies to communityhospitals for convalescent care.

4—Reported from 11 hospitals.NO information on what itcovers.

$24511, a b $1,390 II$394 Ill, a b (ALOS = 11.3 days)

$2,138 Ill(A LOS = 10.8 days)$5,1 78= average

total cost, b

. . Kaufman & Shepard, ModelBudgets (64)● 1977

McCarthy, Children’s Hospital,Denver, Colo. (80)● 1976, 4-month period● 84% S & 16% N S● All transport infants

3a4–Based on Swyer’s (121)

estimate of total patient days(45/1,000 live births need LevelII; 45/1,000 need Level Ill; 6 dayALOS).

4— Includes obstetric andneonatal services.

1, 3b4—Charges include transport

fees.

$125 II (80% occ.)$213 Ill (83%occ.)

$15511, a —$266 Ill, a —

$338 S (mean) $442 S, b —$607 NS (mean) $793 NS, b —

Kaufman & Shepard, Boston 4—Costs allocated based on ac- $579 S & NS $628 $14.654-$40.752 SHospital for Women, Mass. (65) counting costs and services (62-110 days S)● 1977 rendered. Costs cover MD fees, $0-$7,594 NS● 10 infants: 750-999 g ancillary services and overhead,● 40% S & 60% NSMeier, University of Washington 1 $308 S & NS “ $308 $14,190 (46 days)-

NICU (83)● 1978● Infants with HMD● 12 of 31 infants were transfers

Children’s Hospital Medical 3a, 3b, 4— No information on $243 $361 a & bCenter of Northern California

—

number of infants or ALOS. [$430 charge](30). 1976

Case Study #10 The Costs and Effectivess of Neonatal Intensive Care ● 21

Table 10.—Summary of Cost Studies on NICUs—Continued. ——. .

Study a/year/populat ion Characteristics of data

Pomerance, NICU at Cedars-Sinai 1, 3bMedical Center (102) 4— Used 940/0 of collected. Adjusted to 1976 hospital charges as actual cost. Infants 1,000 g of care.● 40% S & 60% NSShannon, Massachusetts General 1,2NICU (1 14)● 1974. Infants without RDS● 70°/0 S & 300/0 NSc 330/0 transfers

Phibbs, UCSF, NICU (98) 1 -

● 1978 (over 30-month period). by S & NS, birth weight,

diagnosis & treatment, inbornv. outborn

s sample = 1,185 infants ——Children’s Hospital Automated 1Medical Programs (29). 1975—12,770 Infants. 1976—14,645 infants. 1977—1 7,714 infants

Average cost Average cost Total costper day updated to 1978 per patient

$825 NS, b $1,078 NS, b $14,236 (17 days)$450 S, b $588 S, b $40,287 (89 days)

$299 S $436

$720 NS $1,050

$545 —

1975–$229 $2981976—$291 $3461977–$340 $369

aNumbers in parentheses refer to references in the list that appears at the end of this case study

$8,842 S(29.6 days)$2,448 NS(3.4 days)

—. ——.— ——— .—$8,069

(ALOS = 16 days)S = $7,620

NS = $11,624

22 . Background Paper #2: Case Studies of Medical Technologies

Table 12.—Cost by Birthweight Group—lnborna

Cost to produceBirthweight group Average cost a survivorb

=3,001 g . . . . . . . . . 2,123 2,138

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