Mark A. Del Beccaro, MD

In recent decades, hospital lengths of stay have decreased and there has been a shift toward outpatient management for many pediatric conditions. In 2003, one‐third of all children admitted to US hospitals experienced 1‐day inpatient stays, an increase from 19% in 1993.1 Some hospitals have developed dedicated observation units for the care of children, with select diagnoses, who are expected to respond to less than 24 hours of treatment.26 Expansion of observation services has been suggested as an approach to lessen emergency department (ED) crowding7 and alleviate high‐capacity conditions within hospital inpatient units.8

In contrast to care delivered in a dedicated observation unit, observation status is an administrative label applied to patients who do not meet inpatient criteria as defined by third parties such as InterQual. While the decision to admit a patient is ultimately at the discretion of the ordering physician, many hospitals use predetermined criteria to assign observation status to patients admitted to observation and inpatient units.9 Treatment provided under observation status is designated by hospitals and payers as outpatient care, even when delivered in an inpatient bed.10 As outpatient‐designated care, observation cases do not enter publicly available administrative datasets of hospital discharges that have traditionally been used to understand hospital resource utilization, including the National Hospital Discharge Survey and the Kid's Inpatient Database.11, 12

We hypothesize that there has been an increase in observation status care delivered to children in recent years, and that the majority of children under observation were discharged home without converting to inpatient status. To determine trends in pediatric observation status care, we conducted the first longitudinal, multicenter evaluation of observation status code utilization following ED treatment in a sample of US freestanding children's hospitals. In addition, we focused on the most recent year of data among top ranking diagnoses to assess the current state of observation status stay outcomes (including conversion to inpatient status and return visits).

METHODS

DATA ANALYSIS

For each of the 6 years of study, we calculated the following proportions to determine trends over time: 1) the number of Observation Status admissions from the ED as a proportion of the total number of ED visits resulting in Observation or Inpatient admission, and 2) the number of 1‐Day Stays admitted from the ED as a proportion of the total number of ED visits resulting in Observation or Inpatient admissions. Trends were analyzed using linear regression. Trends were also calculated for the total volume of admissions from the ED and the case‐mix index (CMI). CMI was assessed to evaluate for changes in the severity of illness for children admitted from the ED over the study period. Each hospital's CMI was calculated as an average of their Observation and Inpatient Status discharges' charge weights during the study period. Charge weights were calculated at the All Patient Refined Diagnosis Related Groups (APR‐DRG)/severity of illness level (3M Health Information Systems, St Paul, MN) and were normalized national average charges derived by Thomson‐Reuters from their Pediatric Projected National Database. Weights were then assigned to each discharge based on the discharge's APR‐DRG and severity level assignment.

To assess the current outcomes for observation, we analyzed stays with associated observation billing codes from the most recent year of available data (2009). Stays with Observation patient type were considered to have been discharged from observation, while those with an Inpatient Status patient type were considered to have converted to an inpatient admission during the observation period.

Using the 2009 data, we calculated descriptive statistics for patient characteristics (eg, age, gender, payer) comparing Observation Stays, 1‐Day Stays, and longer‐duration Inpatient admissions using chi‐square statistics. Age was categorized using the American Academy of Pediatrics groupings: <30 days, 30 days1 year, 12 years, 34 years, 512 years, 1317 years, >18 years. Designated payer was categorized into government, private, and other, including self‐pay and uninsured groups.

We used the Severity Classification Systems (SCS) developed for pediatric emergency care to estimate severity of illness for the visit.17 In this 5‐level system, each ICD‐9 diagnosis code is associated with a score related to the intensity of ED resources needed to care for a child with that diagnosis. In our analyses, each case was assigned the maximal SCS category based on the highest severity ICD‐9 code associated with the stay. Within the SCS, a score of 1 indicates minor illness (eg, diaper dermatitis) and 5 indicates major illness (eg, septic shock). The proportions of visits within categorical SCS scores were compared for Observation Stays, 1‐Day Stays, and longer‐duration Inpatient admissions using chi‐square statistics.

We determined the top 10 ranking diagnoses for which children were admitted from the ED in 2009 using the Diagnosis Grouping System (DGS).18 The DGS was designed specifically to categorize pediatric ED visits into clinically meaningful groups. The ICD‐9 code for the principal discharge diagnosis was used to assign records to 1 of the 77 DGS subgroups. Within each of the top ranking DGS subgroups, we determined the proportion of Observation Stays, 1‐Day Stays, and longer‐duration Inpatient admissions.

To provide clinically relevant outcomes of Observation Stays for common conditions, we selected stays with observation charges from within the top 10 ranking observation stay DGS subgroups in 2009. Outcomes for observation included: 1) immediate outcome of the observation stay (ie, discharge or conversion to inpatient status), 2) return visits to the ED in the 3 days following observation, and 3) readmissions to the hospital in the 3 and 30 days following observation. Bivariate comparisons of return visits and readmissions for Observation versus 1‐Day Stays within DGS subgroups were analyzed using chi‐square tests. Multivariate analyses of return visits and readmissions were conducted using Generalized Estimating Equations adjusting for severity of illness by SCS score and clustering by hospital. To account for local practice patterns, we also adjusted for a grouped treatment variable that included the site level proportion of children admitted to Observation Status, 1‐Day‐Stays, and longer Inpatient admissions. All statistical analyses were performed using SAS (version 9.2, SAS Institute, Inc, Cary, NC); P values <0.05 were considered statistically significant.

RESULTS

Trends in Short‐Stays

An increase in proportion of Observation Stays was mirrored by a decrease in proportion of 1‐Day Stays over the study period (Figure 1). In 2009, there were 1.4 times more Observation Stays than 1‐Day Stays (25,653 vs 18,425) compared with 14,242 and 20,747, respectively, in 2004. This shift toward more Observation Stays occurred as hospitals faced a 16% increase in the total number of admissions from the ED (91,318 to 108,217) and change in CMI from 1.48 to 1.51. Over the study period, roughly 40% of all admissions from the ED were Short‐Stays (Observation and 1‐Day Stays). Median LOS for Observation Status stays was 1 day (interquartile range [IQR]: 11).

Figure 1

DISCUSSION

In this first, multicenter longitudinal study of pediatric observation following an ED visit, we found that Observation Status code utilization has increased steadily over the past 6 years and, in 2007, the proportion of children admitted to observation status surpassed the proportion of children experiencing a 1‐day inpatient admission. Taken together, Short‐Stays made up more than 40% of the hospital‐based care delivered to children admitted from an ED. Stable trends in CMI over time suggest that observation status may be replacing inpatient status designated care for pediatric Short‐Stays in these hospitals. Our findings suggest the lines between outpatient observation and short‐stay inpatient care are becoming increasingly blurred. These trends have occurred in the setting of changing policies for hospital reimbursement, requirements for patients to meet criteria to qualify for inpatient admissions, and efforts to avoid stays deemed unnecessary or inappropriate by their brief duration.19 Therefore there is a growing need to understand the impact of children under observation on the structure, delivery, and financing of acute hospital care for children.

Our results also have implications for pediatric health services research that relies on hospital administrative databases that do not contain observation stays. Currently, observation stays are systematically excluded from many inpatient administrative datasets.11, 12 Analyses of datasets that do not account for observation stays likely result in underestimation of hospitalization rates and hospital resource utilization for children. This may be particularly important for high‐volume conditions, such as asthma and acute infections, for which children commonly require brief periods of hospital‐based care beyond an ED encounter. Data from pediatric observation status admissions should be consistently included in hospital administrative datasets to allow for more comprehensive analyses of hospital resource utilization among children.

Prior research has shown that the diagnoses commonly treated in pediatric observation units overlap with the diagnoses for which children experience 1‐Day Stays.1, 20 We found a similar pattern of conditions for which children were under Observation Status and 1‐Day Stays with comparable severity of illness between the groups in terms of SCS scores. Our findings imply a need to determine how and why hospitals differentiate Observation Status from 1‐Day‐Stay groups in order to improve the assignment of observation status. Assuming continued pressures from payers to provide more care in outpatient or observation settings, there is potential for expansion of dedicated observation services for children in the US. Without designated observation units or processes to group patients with lower severity conditions, there may be limited opportunities to realize more efficient hospital care simply through the application of the label of observation status.

For more than 30 years, observation services have been provided to children who require a period of monitoring to determine their response to therapy and the need for acute inpatient admission from the ED.21While we were not able to determine the location of care for observation status patients in this study, we know that few children's hospitals have dedicated observation units and, even when an observation unit is present, not all observation status patients are cared for in dedicated observation units.9 This, in essence, means that most children under observation status are cared for in virtual observation by inpatient teams using inpatient beds. If observation patients are treated in inpatient beds and consume the same resources as inpatients, then cost‐savings based on reimbursement contracts with payers may not reflect an actual reduction in services. Pediatric institutions will need to closely monitor the financial implications of observation status given the historical differences in payment for observation and inpatient care.

With more than 70% of children being discharged home following observation, our results are comparable to the published literature2, 5, 6, 22, 23 and guidelines for observation unit operations.24 Similar to prior studies,4, 15, 2530 our results also indicate that return visits and readmissions following observation are uncommon events. Our findings can serve as initial benchmarks for condition‐specific outcomes for pediatric observation care. Studies are needed both to identify the clinical characteristics predictive of successful discharge home from observation and to explore the hospital‐to‐hospital variability in outcomes for observation. Such studies are necessary to identify the most successful healthcare delivery models for pediatric observation stays.

LIMITATIONS

The primary limitation to our results is that data from a subset of freestanding children's hospitals may not reflect observation stays at other children's hospitals or the community hospitals that care for children across the US. Only 18 of 42 current PHIS member hospitals have provided both outpatient visit and inpatient stay data for each year of the study period and were considered eligible. In an effort to ensure the quality of observation stay data, we included the 16 hospitals that assigned observation charges to at least 90% of their observation status stays in the PHIS database. The exclusion of the 2 hospitals where <90% of observation status patients were assigned observation charges likely resulted in an underestimation of the utilization of observation status.

Second, there is potential for misclassification of patient type given institutional variations in the assignment of patient status. The PHIS database does not contain information about the factors that were considered in the assignment of observation status. At the time of admission from the ED, observation or inpatient status is assigned. While this decision is clearly reserved for the admitting physician, the process is not standardized across hospitals.9 Some institutions have Utilization Managers on site to help guide decision‐making, while others allow the assignment to be made by physicians without specific guidance. As a result, some patients may be assigned to observation status at admission and reassigned to inpatient status following Utilization Review, which may bias our results toward overestimation of the number of observation stays that converted to inpatient status.

The third limitation to our results relates to return visits. An accurate assessment of return visits is subject to the patient returning to the same hospital. If children do not return to the same hospital, our results would underestimate return visits and readmissions. In addition, we did not assess the reason for return visit as there was no way to verify if the return visit was truly related to the index visit without detailed chart review. Assuming children return to the same hospital for different reasons, our results would overestimate return visits associated with observation stays. We suspect that many 3‐day return visits result from the progression of acute illness or failure to respond to initial treatment, and 30‐day readmissions reflect recurrent hospital care needs related to chronic illnesses.

Lastly, severity classification is difficult when analyzing administrative datasets without physiologic patient data, and the SCS may not provide enough detail to reveal clinically important differences between patient groups.

CONCLUSIONS

Short‐stay hospitalizations following ED visits are common among children, and the majority of pediatric short‐stays are under observation status. Analyses of inpatient administrative databases that exclude observation stays likely result in an underestimation of hospital resource utilization for children. Efforts are needed to ensure that patients under observation status are accounted for in hospital administrative datasets used for pediatric health services research, and healthcare resource allocation, as it relates to hospital‐based care. While the clinical outcomes for observation patients appear favorable in terms of conversion to inpatient admissions and return visits, the financial implications of observation status care within children's hospitals are currently unknown.

In recent decades, hospital lengths of stay have decreased and there has been a shift toward outpatient management for many pediatric conditions. In 2003, one‐third of all children admitted to US hospitals experienced 1‐day inpatient stays, an increase from 19% in 1993.1 Some hospitals have developed dedicated observation units for the care of children, with select diagnoses, who are expected to respond to less than 24 hours of treatment.26 Expansion of observation services has been suggested as an approach to lessen emergency department (ED) crowding7 and alleviate high‐capacity conditions within hospital inpatient units.8

In contrast to care delivered in a dedicated observation unit, observation status is an administrative label applied to patients who do not meet inpatient criteria as defined by third parties such as InterQual. While the decision to admit a patient is ultimately at the discretion of the ordering physician, many hospitals use predetermined criteria to assign observation status to patients admitted to observation and inpatient units.9 Treatment provided under observation status is designated by hospitals and payers as outpatient care, even when delivered in an inpatient bed.10 As outpatient‐designated care, observation cases do not enter publicly available administrative datasets of hospital discharges that have traditionally been used to understand hospital resource utilization, including the National Hospital Discharge Survey and the Kid's Inpatient Database.11, 12

We hypothesize that there has been an increase in observation status care delivered to children in recent years, and that the majority of children under observation were discharged home without converting to inpatient status. To determine trends in pediatric observation status care, we conducted the first longitudinal, multicenter evaluation of observation status code utilization following ED treatment in a sample of US freestanding children's hospitals. In addition, we focused on the most recent year of data among top ranking diagnoses to assess the current state of observation status stay outcomes (including conversion to inpatient status and return visits).

METHODS

DATA ANALYSIS

For each of the 6 years of study, we calculated the following proportions to determine trends over time: 1) the number of Observation Status admissions from the ED as a proportion of the total number of ED visits resulting in Observation or Inpatient admission, and 2) the number of 1‐Day Stays admitted from the ED as a proportion of the total number of ED visits resulting in Observation or Inpatient admissions. Trends were analyzed using linear regression. Trends were also calculated for the total volume of admissions from the ED and the case‐mix index (CMI). CMI was assessed to evaluate for changes in the severity of illness for children admitted from the ED over the study period. Each hospital's CMI was calculated as an average of their Observation and Inpatient Status discharges' charge weights during the study period. Charge weights were calculated at the All Patient Refined Diagnosis Related Groups (APR‐DRG)/severity of illness level (3M Health Information Systems, St Paul, MN) and were normalized national average charges derived by Thomson‐Reuters from their Pediatric Projected National Database. Weights were then assigned to each discharge based on the discharge's APR‐DRG and severity level assignment.

To assess the current outcomes for observation, we analyzed stays with associated observation billing codes from the most recent year of available data (2009). Stays with Observation patient type were considered to have been discharged from observation, while those with an Inpatient Status patient type were considered to have converted to an inpatient admission during the observation period.

Using the 2009 data, we calculated descriptive statistics for patient characteristics (eg, age, gender, payer) comparing Observation Stays, 1‐Day Stays, and longer‐duration Inpatient admissions using chi‐square statistics. Age was categorized using the American Academy of Pediatrics groupings: <30 days, 30 days1 year, 12 years, 34 years, 512 years, 1317 years, >18 years. Designated payer was categorized into government, private, and other, including self‐pay and uninsured groups.

We used the Severity Classification Systems (SCS) developed for pediatric emergency care to estimate severity of illness for the visit.17 In this 5‐level system, each ICD‐9 diagnosis code is associated with a score related to the intensity of ED resources needed to care for a child with that diagnosis. In our analyses, each case was assigned the maximal SCS category based on the highest severity ICD‐9 code associated with the stay. Within the SCS, a score of 1 indicates minor illness (eg, diaper dermatitis) and 5 indicates major illness (eg, septic shock). The proportions of visits within categorical SCS scores were compared for Observation Stays, 1‐Day Stays, and longer‐duration Inpatient admissions using chi‐square statistics.

We determined the top 10 ranking diagnoses for which children were admitted from the ED in 2009 using the Diagnosis Grouping System (DGS).18 The DGS was designed specifically to categorize pediatric ED visits into clinically meaningful groups. The ICD‐9 code for the principal discharge diagnosis was used to assign records to 1 of the 77 DGS subgroups. Within each of the top ranking DGS subgroups, we determined the proportion of Observation Stays, 1‐Day Stays, and longer‐duration Inpatient admissions.

To provide clinically relevant outcomes of Observation Stays for common conditions, we selected stays with observation charges from within the top 10 ranking observation stay DGS subgroups in 2009. Outcomes for observation included: 1) immediate outcome of the observation stay (ie, discharge or conversion to inpatient status), 2) return visits to the ED in the 3 days following observation, and 3) readmissions to the hospital in the 3 and 30 days following observation. Bivariate comparisons of return visits and readmissions for Observation versus 1‐Day Stays within DGS subgroups were analyzed using chi‐square tests. Multivariate analyses of return visits and readmissions were conducted using Generalized Estimating Equations adjusting for severity of illness by SCS score and clustering by hospital. To account for local practice patterns, we also adjusted for a grouped treatment variable that included the site level proportion of children admitted to Observation Status, 1‐Day‐Stays, and longer Inpatient admissions. All statistical analyses were performed using SAS (version 9.2, SAS Institute, Inc, Cary, NC); P values <0.05 were considered statistically significant.

RESULTS

Trends in Short‐Stays

An increase in proportion of Observation Stays was mirrored by a decrease in proportion of 1‐Day Stays over the study period (Figure 1). In 2009, there were 1.4 times more Observation Stays than 1‐Day Stays (25,653 vs 18,425) compared with 14,242 and 20,747, respectively, in 2004. This shift toward more Observation Stays occurred as hospitals faced a 16% increase in the total number of admissions from the ED (91,318 to 108,217) and change in CMI from 1.48 to 1.51. Over the study period, roughly 40% of all admissions from the ED were Short‐Stays (Observation and 1‐Day Stays). Median LOS for Observation Status stays was 1 day (interquartile range [IQR]: 11).

Figure 1

DISCUSSION

In this first, multicenter longitudinal study of pediatric observation following an ED visit, we found that Observation Status code utilization has increased steadily over the past 6 years and, in 2007, the proportion of children admitted to observation status surpassed the proportion of children experiencing a 1‐day inpatient admission. Taken together, Short‐Stays made up more than 40% of the hospital‐based care delivered to children admitted from an ED. Stable trends in CMI over time suggest that observation status may be replacing inpatient status designated care for pediatric Short‐Stays in these hospitals. Our findings suggest the lines between outpatient observation and short‐stay inpatient care are becoming increasingly blurred. These trends have occurred in the setting of changing policies for hospital reimbursement, requirements for patients to meet criteria to qualify for inpatient admissions, and efforts to avoid stays deemed unnecessary or inappropriate by their brief duration.19 Therefore there is a growing need to understand the impact of children under observation on the structure, delivery, and financing of acute hospital care for children.

Our results also have implications for pediatric health services research that relies on hospital administrative databases that do not contain observation stays. Currently, observation stays are systematically excluded from many inpatient administrative datasets.11, 12 Analyses of datasets that do not account for observation stays likely result in underestimation of hospitalization rates and hospital resource utilization for children. This may be particularly important for high‐volume conditions, such as asthma and acute infections, for which children commonly require brief periods of hospital‐based care beyond an ED encounter. Data from pediatric observation status admissions should be consistently included in hospital administrative datasets to allow for more comprehensive analyses of hospital resource utilization among children.

Prior research has shown that the diagnoses commonly treated in pediatric observation units overlap with the diagnoses for which children experience 1‐Day Stays.1, 20 We found a similar pattern of conditions for which children were under Observation Status and 1‐Day Stays with comparable severity of illness between the groups in terms of SCS scores. Our findings imply a need to determine how and why hospitals differentiate Observation Status from 1‐Day‐Stay groups in order to improve the assignment of observation status. Assuming continued pressures from payers to provide more care in outpatient or observation settings, there is potential for expansion of dedicated observation services for children in the US. Without designated observation units or processes to group patients with lower severity conditions, there may be limited opportunities to realize more efficient hospital care simply through the application of the label of observation status.

For more than 30 years, observation services have been provided to children who require a period of monitoring to determine their response to therapy and the need for acute inpatient admission from the ED.21While we were not able to determine the location of care for observation status patients in this study, we know that few children's hospitals have dedicated observation units and, even when an observation unit is present, not all observation status patients are cared for in dedicated observation units.9 This, in essence, means that most children under observation status are cared for in virtual observation by inpatient teams using inpatient beds. If observation patients are treated in inpatient beds and consume the same resources as inpatients, then cost‐savings based on reimbursement contracts with payers may not reflect an actual reduction in services. Pediatric institutions will need to closely monitor the financial implications of observation status given the historical differences in payment for observation and inpatient care.

With more than 70% of children being discharged home following observation, our results are comparable to the published literature2, 5, 6, 22, 23 and guidelines for observation unit operations.24 Similar to prior studies,4, 15, 2530 our results also indicate that return visits and readmissions following observation are uncommon events. Our findings can serve as initial benchmarks for condition‐specific outcomes for pediatric observation care. Studies are needed both to identify the clinical characteristics predictive of successful discharge home from observation and to explore the hospital‐to‐hospital variability in outcomes for observation. Such studies are necessary to identify the most successful healthcare delivery models for pediatric observation stays.

LIMITATIONS

The primary limitation to our results is that data from a subset of freestanding children's hospitals may not reflect observation stays at other children's hospitals or the community hospitals that care for children across the US. Only 18 of 42 current PHIS member hospitals have provided both outpatient visit and inpatient stay data for each year of the study period and were considered eligible. In an effort to ensure the quality of observation stay data, we included the 16 hospitals that assigned observation charges to at least 90% of their observation status stays in the PHIS database. The exclusion of the 2 hospitals where <90% of observation status patients were assigned observation charges likely resulted in an underestimation of the utilization of observation status.

Second, there is potential for misclassification of patient type given institutional variations in the assignment of patient status. The PHIS database does not contain information about the factors that were considered in the assignment of observation status. At the time of admission from the ED, observation or inpatient status is assigned. While this decision is clearly reserved for the admitting physician, the process is not standardized across hospitals.9 Some institutions have Utilization Managers on site to help guide decision‐making, while others allow the assignment to be made by physicians without specific guidance. As a result, some patients may be assigned to observation status at admission and reassigned to inpatient status following Utilization Review, which may bias our results toward overestimation of the number of observation stays that converted to inpatient status.

The third limitation to our results relates to return visits. An accurate assessment of return visits is subject to the patient returning to the same hospital. If children do not return to the same hospital, our results would underestimate return visits and readmissions. In addition, we did not assess the reason for return visit as there was no way to verify if the return visit was truly related to the index visit without detailed chart review. Assuming children return to the same hospital for different reasons, our results would overestimate return visits associated with observation stays. We suspect that many 3‐day return visits result from the progression of acute illness or failure to respond to initial treatment, and 30‐day readmissions reflect recurrent hospital care needs related to chronic illnesses.

Lastly, severity classification is difficult when analyzing administrative datasets without physiologic patient data, and the SCS may not provide enough detail to reveal clinically important differences between patient groups.

CONCLUSIONS

Short‐stay hospitalizations following ED visits are common among children, and the majority of pediatric short‐stays are under observation status. Analyses of inpatient administrative databases that exclude observation stays likely result in an underestimation of hospital resource utilization for children. Efforts are needed to ensure that patients under observation status are accounted for in hospital administrative datasets used for pediatric health services research, and healthcare resource allocation, as it relates to hospital‐based care. While the clinical outcomes for observation patients appear favorable in terms of conversion to inpatient admissions and return visits, the financial implications of observation status care within children's hospitals are currently unknown.

In recent decades, hospital lengths of stay have decreased and there has been a shift toward outpatient management for many pediatric conditions. In 2003, one‐third of all children admitted to US hospitals experienced 1‐day inpatient stays, an increase from 19% in 1993.1 Some hospitals have developed dedicated observation units for the care of children, with select diagnoses, who are expected to respond to less than 24 hours of treatment.26 Expansion of observation services has been suggested as an approach to lessen emergency department (ED) crowding7 and alleviate high‐capacity conditions within hospital inpatient units.8

In contrast to care delivered in a dedicated observation unit, observation status is an administrative label applied to patients who do not meet inpatient criteria as defined by third parties such as InterQual. While the decision to admit a patient is ultimately at the discretion of the ordering physician, many hospitals use predetermined criteria to assign observation status to patients admitted to observation and inpatient units.9 Treatment provided under observation status is designated by hospitals and payers as outpatient care, even when delivered in an inpatient bed.10 As outpatient‐designated care, observation cases do not enter publicly available administrative datasets of hospital discharges that have traditionally been used to understand hospital resource utilization, including the National Hospital Discharge Survey and the Kid's Inpatient Database.11, 12

We hypothesize that there has been an increase in observation status care delivered to children in recent years, and that the majority of children under observation were discharged home without converting to inpatient status. To determine trends in pediatric observation status care, we conducted the first longitudinal, multicenter evaluation of observation status code utilization following ED treatment in a sample of US freestanding children's hospitals. In addition, we focused on the most recent year of data among top ranking diagnoses to assess the current state of observation status stay outcomes (including conversion to inpatient status and return visits).

METHODS

DATA ANALYSIS

For each of the 6 years of study, we calculated the following proportions to determine trends over time: 1) the number of Observation Status admissions from the ED as a proportion of the total number of ED visits resulting in Observation or Inpatient admission, and 2) the number of 1‐Day Stays admitted from the ED as a proportion of the total number of ED visits resulting in Observation or Inpatient admissions. Trends were analyzed using linear regression. Trends were also calculated for the total volume of admissions from the ED and the case‐mix index (CMI). CMI was assessed to evaluate for changes in the severity of illness for children admitted from the ED over the study period. Each hospital's CMI was calculated as an average of their Observation and Inpatient Status discharges' charge weights during the study period. Charge weights were calculated at the All Patient Refined Diagnosis Related Groups (APR‐DRG)/severity of illness level (3M Health Information Systems, St Paul, MN) and were normalized national average charges derived by Thomson‐Reuters from their Pediatric Projected National Database. Weights were then assigned to each discharge based on the discharge's APR‐DRG and severity level assignment.

To assess the current outcomes for observation, we analyzed stays with associated observation billing codes from the most recent year of available data (2009). Stays with Observation patient type were considered to have been discharged from observation, while those with an Inpatient Status patient type were considered to have converted to an inpatient admission during the observation period.

Using the 2009 data, we calculated descriptive statistics for patient characteristics (eg, age, gender, payer) comparing Observation Stays, 1‐Day Stays, and longer‐duration Inpatient admissions using chi‐square statistics. Age was categorized using the American Academy of Pediatrics groupings: <30 days, 30 days1 year, 12 years, 34 years, 512 years, 1317 years, >18 years. Designated payer was categorized into government, private, and other, including self‐pay and uninsured groups.

We used the Severity Classification Systems (SCS) developed for pediatric emergency care to estimate severity of illness for the visit.17 In this 5‐level system, each ICD‐9 diagnosis code is associated with a score related to the intensity of ED resources needed to care for a child with that diagnosis. In our analyses, each case was assigned the maximal SCS category based on the highest severity ICD‐9 code associated with the stay. Within the SCS, a score of 1 indicates minor illness (eg, diaper dermatitis) and 5 indicates major illness (eg, septic shock). The proportions of visits within categorical SCS scores were compared for Observation Stays, 1‐Day Stays, and longer‐duration Inpatient admissions using chi‐square statistics.

We determined the top 10 ranking diagnoses for which children were admitted from the ED in 2009 using the Diagnosis Grouping System (DGS).18 The DGS was designed specifically to categorize pediatric ED visits into clinically meaningful groups. The ICD‐9 code for the principal discharge diagnosis was used to assign records to 1 of the 77 DGS subgroups. Within each of the top ranking DGS subgroups, we determined the proportion of Observation Stays, 1‐Day Stays, and longer‐duration Inpatient admissions.

To provide clinically relevant outcomes of Observation Stays for common conditions, we selected stays with observation charges from within the top 10 ranking observation stay DGS subgroups in 2009. Outcomes for observation included: 1) immediate outcome of the observation stay (ie, discharge or conversion to inpatient status), 2) return visits to the ED in the 3 days following observation, and 3) readmissions to the hospital in the 3 and 30 days following observation. Bivariate comparisons of return visits and readmissions for Observation versus 1‐Day Stays within DGS subgroups were analyzed using chi‐square tests. Multivariate analyses of return visits and readmissions were conducted using Generalized Estimating Equations adjusting for severity of illness by SCS score and clustering by hospital. To account for local practice patterns, we also adjusted for a grouped treatment variable that included the site level proportion of children admitted to Observation Status, 1‐Day‐Stays, and longer Inpatient admissions. All statistical analyses were performed using SAS (version 9.2, SAS Institute, Inc, Cary, NC); P values <0.05 were considered statistically significant.

RESULTS

Trends in Short‐Stays

An increase in proportion of Observation Stays was mirrored by a decrease in proportion of 1‐Day Stays over the study period (Figure 1). In 2009, there were 1.4 times more Observation Stays than 1‐Day Stays (25,653 vs 18,425) compared with 14,242 and 20,747, respectively, in 2004. This shift toward more Observation Stays occurred as hospitals faced a 16% increase in the total number of admissions from the ED (91,318 to 108,217) and change in CMI from 1.48 to 1.51. Over the study period, roughly 40% of all admissions from the ED were Short‐Stays (Observation and 1‐Day Stays). Median LOS for Observation Status stays was 1 day (interquartile range [IQR]: 11).

Figure 1

DISCUSSION

In this first, multicenter longitudinal study of pediatric observation following an ED visit, we found that Observation Status code utilization has increased steadily over the past 6 years and, in 2007, the proportion of children admitted to observation status surpassed the proportion of children experiencing a 1‐day inpatient admission. Taken together, Short‐Stays made up more than 40% of the hospital‐based care delivered to children admitted from an ED. Stable trends in CMI over time suggest that observation status may be replacing inpatient status designated care for pediatric Short‐Stays in these hospitals. Our findings suggest the lines between outpatient observation and short‐stay inpatient care are becoming increasingly blurred. These trends have occurred in the setting of changing policies for hospital reimbursement, requirements for patients to meet criteria to qualify for inpatient admissions, and efforts to avoid stays deemed unnecessary or inappropriate by their brief duration.19 Therefore there is a growing need to understand the impact of children under observation on the structure, delivery, and financing of acute hospital care for children.

Our results also have implications for pediatric health services research that relies on hospital administrative databases that do not contain observation stays. Currently, observation stays are systematically excluded from many inpatient administrative datasets.11, 12 Analyses of datasets that do not account for observation stays likely result in underestimation of hospitalization rates and hospital resource utilization for children. This may be particularly important for high‐volume conditions, such as asthma and acute infections, for which children commonly require brief periods of hospital‐based care beyond an ED encounter. Data from pediatric observation status admissions should be consistently included in hospital administrative datasets to allow for more comprehensive analyses of hospital resource utilization among children.

Prior research has shown that the diagnoses commonly treated in pediatric observation units overlap with the diagnoses for which children experience 1‐Day Stays.1, 20 We found a similar pattern of conditions for which children were under Observation Status and 1‐Day Stays with comparable severity of illness between the groups in terms of SCS scores. Our findings imply a need to determine how and why hospitals differentiate Observation Status from 1‐Day‐Stay groups in order to improve the assignment of observation status. Assuming continued pressures from payers to provide more care in outpatient or observation settings, there is potential for expansion of dedicated observation services for children in the US. Without designated observation units or processes to group patients with lower severity conditions, there may be limited opportunities to realize more efficient hospital care simply through the application of the label of observation status.

For more than 30 years, observation services have been provided to children who require a period of monitoring to determine their response to therapy and the need for acute inpatient admission from the ED.21While we were not able to determine the location of care for observation status patients in this study, we know that few children's hospitals have dedicated observation units and, even when an observation unit is present, not all observation status patients are cared for in dedicated observation units.9 This, in essence, means that most children under observation status are cared for in virtual observation by inpatient teams using inpatient beds. If observation patients are treated in inpatient beds and consume the same resources as inpatients, then cost‐savings based on reimbursement contracts with payers may not reflect an actual reduction in services. Pediatric institutions will need to closely monitor the financial implications of observation status given the historical differences in payment for observation and inpatient care.

With more than 70% of children being discharged home following observation, our results are comparable to the published literature2, 5, 6, 22, 23 and guidelines for observation unit operations.24 Similar to prior studies,4, 15, 2530 our results also indicate that return visits and readmissions following observation are uncommon events. Our findings can serve as initial benchmarks for condition‐specific outcomes for pediatric observation care. Studies are needed both to identify the clinical characteristics predictive of successful discharge home from observation and to explore the hospital‐to‐hospital variability in outcomes for observation. Such studies are necessary to identify the most successful healthcare delivery models for pediatric observation stays.

LIMITATIONS

The primary limitation to our results is that data from a subset of freestanding children's hospitals may not reflect observation stays at other children's hospitals or the community hospitals that care for children across the US. Only 18 of 42 current PHIS member hospitals have provided both outpatient visit and inpatient stay data for each year of the study period and were considered eligible. In an effort to ensure the quality of observation stay data, we included the 16 hospitals that assigned observation charges to at least 90% of their observation status stays in the PHIS database. The exclusion of the 2 hospitals where <90% of observation status patients were assigned observation charges likely resulted in an underestimation of the utilization of observation status.

Second, there is potential for misclassification of patient type given institutional variations in the assignment of patient status. The PHIS database does not contain information about the factors that were considered in the assignment of observation status. At the time of admission from the ED, observation or inpatient status is assigned. While this decision is clearly reserved for the admitting physician, the process is not standardized across hospitals.9 Some institutions have Utilization Managers on site to help guide decision‐making, while others allow the assignment to be made by physicians without specific guidance. As a result, some patients may be assigned to observation status at admission and reassigned to inpatient status following Utilization Review, which may bias our results toward overestimation of the number of observation stays that converted to inpatient status.

The third limitation to our results relates to return visits. An accurate assessment of return visits is subject to the patient returning to the same hospital. If children do not return to the same hospital, our results would underestimate return visits and readmissions. In addition, we did not assess the reason for return visit as there was no way to verify if the return visit was truly related to the index visit without detailed chart review. Assuming children return to the same hospital for different reasons, our results would overestimate return visits associated with observation stays. We suspect that many 3‐day return visits result from the progression of acute illness or failure to respond to initial treatment, and 30‐day readmissions reflect recurrent hospital care needs related to chronic illnesses.

Lastly, severity classification is difficult when analyzing administrative datasets without physiologic patient data, and the SCS may not provide enough detail to reveal clinically important differences between patient groups.

CONCLUSIONS

Short‐stay hospitalizations following ED visits are common among children, and the majority of pediatric short‐stays are under observation status. Analyses of inpatient administrative databases that exclude observation stays likely result in an underestimation of hospital resource utilization for children. Efforts are needed to ensure that patients under observation status are accounted for in hospital administrative datasets used for pediatric health services research, and healthcare resource allocation, as it relates to hospital‐based care. While the clinical outcomes for observation patients appear favorable in terms of conversion to inpatient admissions and return visits, the financial implications of observation status care within children's hospitals are currently unknown.

Observation medicine has grown in recent decades out of changes in policies for hospital reimbursement, requirements for patients to meet admission criteria to qualify for inpatient admission, and efforts to avoid unnecessary or inappropriate admissions.1 Emergency physicians are frequently faced with patients who are too sick to be discharged home, but do not clearly meet criteria for an inpatient status admission. These patients often receive extended outpatient services (typically extending 24 to 48 hours) under the designation of observation status, in order to determine their response to treatment and need for hospitalization.

Observation care delivered to adult patients has increased substantially in recent years, and the confusion around the designation of observation versus inpatient care has received increasing attention in the lay press.27 According to the Centers for Medicare and Medicaid Services (CMS)8:

Observation status is an administrative label that is applied to patients who do not meet inpatient level of care criteria, as defined by third parties such as InterQual. These criteria usually include a combination of the patient's clinical diagnoses, severity of illness, and expected needs for monitoring and interventions, in order to determine the admission status to which the patient may be assigned (eg, observation, inpatient, or intensive care). Observation services can be provided, in a variety of settings, to those patients who do not meet inpatient level of care but require a period of observation. Some hospitals provide observation care in discrete units in the emergency department (ED) or specific inpatient unit, and others have no designated unit but scatter observation patients throughout the institution, termed virtual observation units.9

For more than 30 years, observation unit (OU) admission has offered an alternative to traditional inpatient hospitalization for children with a variety of acute conditions.10, 11 Historically, the published literature on observation care for children in the United States has been largely based in dedicated emergency department OUs.12 Yet, in a 2001 survey of 21 pediatric EDs, just 6 reported the presence of a 23‐hour unit.13 There are single‐site examples of observation care delivered in other settings.14, 15 In 2 national surveys of US General Hospitals, 25% provided observation services in beds adjacent to the ED, and the remainder provided observation services in hospital inpatient units.16, 17 However, we are not aware of any previous multi‐institution studies exploring hospital‐wide practices related to observation care for children.

Recognizing that observation status can be designated using various standards, and that observation care can be delivered in locations outside of dedicated OUs,9 we developed 2 web‐based surveys to examine the current models of pediatric observation medicine in US children's hospitals. We hypothesized that observation care is most commonly applied as a billing designation and does not necessarily represent care delivered in a structurally or functionally distinct OU, nor does it represent a difference in care provided to those patients with inpatient designation.

METHODS

DATA ANALYSIS

Survey responses were collected and are presented as a descriptive summary of results. Hospital characteristics were summarized with medians and interquartile ranges for continuous variables, and with percents for categorical variables. Characteristics were compared between hospitals that responded and those that did not respond to Survey 2 using Wilcoxon rank‐sum tests and chi‐square tests as appropriate. All analyses were performed using SAS v.9.2 (SAS Institute, Cary, NC), and a P value <0.05 was considered statistically significant. The study was reviewed by the University of Michigan Institutional Review Board and considered exempt.

RESULTS

Responses to Survey 1 were available from 37 of 42 (88%) of PHIS hospitals (Figure 1). For Survey 2, we received responses from 20 of 42 (48%) of PHIS hospitals. Based on information available from Survey 1, we know that 20 of the 31 (65%) PHIS hospitals that report observation status patient data to PHIS responded to Survey 2. Characteristics of the hospitals responding and not responding to Survey 2 are presented in Table 1. Respondents provided hospital identifying information which allowed for the linkage of data, from Survey 1, to 17 of the 20 hospitals responding to Survey 2. We did not have information available to link responses from 3 hospitals.

Figure 1

Based on responses to the surveys and our knowledge of data reported to PHIS, our current understanding of patient flow from ED through observation to discharge home, and the application of observation status to the encounter, is presented in Figure 2. According to free‐text responses to Survey 1, various methods were applied to designate observation status (gray shaded boxes in Figure 2). Fixed‐choice responses to Survey 2 revealed that observation status patients were cared for in a variety of locations within hospitals, including ED beds, designated observation units, and inpatient beds (dashed boxes in Figure 2). Not every facility utilized all of the listed locations for observation care. Space constraints could dictate the location of care, regardless of patient status (eg, observation vs inpatient), in hospitals with more than one location of care available to observation patients. While patient status could change during a visit, only the final patient status at discharge enters the administrative record submitted to PHIS (black boxes in Figure 2). Facility charges for observation remained a part of the visit record and were reported to PHIS. Hospitals may or may not bill for all assigned charges depending on patient status, length of stay, or other specific criteria determined by contracts with individual payers.

Figure 2

DISCUSSION

This is the largest descriptive study of pediatric observation status practices in US freestanding children's hospitals and, to our knowledge, the first to include information about both the ED and inpatient treatment environments. There are two important findings of this study. First, designated OUs were uncommon among the group of freestanding children's hospitals that reported observation patient data to PHIS in 2010. Second, despite the fact that hospitals reported observation care was delivered in a variety of settings, virtual inpatient observation status was nearly ubiquitous. Among the subset of hospitals that provided information about the clinical care delivered to patients admitted under virtual inpatient observation, hospitals frequently reported there were no differences in the care delivered to observation patients when compared with other inpatients.

The results of our survey indicate that designated OUs are not a commonly available model of observation care in the study hospitals. In fact, the vast majority of the hospitals used virtual inpatient observation care, which did not differ from the care delivered to a child admitted as an inpatient. ED‐based OUs, which often provide operationally and physically distinct care to observation patients, have been touted as cost‐effective alternatives to inpatient care,1820 resulting in fewer admissions and reductions in length of stay19, 20 without a resultant increase in return ED‐visits or readmissions.2123 Research is needed to determine the patient‐level outcomes for short‐stay patients in the variety of available treatment settings (eg, physically or operationally distinct OUs and virtual observation), and to evaluate these outcomes in comparison to results published from designated OUs. The operationally and physically distinct features of a designated OU may be required to realize the benefits of observation attributed to individual patients.

While observation care has been historically provided by emergency physicians, there is increasing interest in the role of inpatient providers in observation care.9 According to our survey, children were admitted to observation status directly from clinics, following surgical procedures, scheduled tests and treatment, or after evaluation and treatment in the ED. As many of these children undergo virtual observation in inpatient areas, the role of inpatient providers, such as pediatric hospitalists, in observation care may be an important area for future study, education, and professional development. Novel models of care, with hospitalists collaborating with emergency physicians, may be of benefit to the children who require observation following initial stabilization and treatment in the ED.24, 25

We identified variation between hospitals in the methods used to assign observation status to an episode of care, including a wide range of length of stay criteria and different approaches to utilization review. In addition, the criteria payers use to reimburse for observation varied between payers, even within individual hospitals. The results of our survey may be driven by issues of reimbursement and not based on a model of optimizing patient care outcomes using designated OUs. Variations in reimbursement may limit hospital efforts to refine models of observation care for children. Designated OUs have been suggested as a method for improving ED patient flow,26 increasing inpatient capacity,27 and reducing costs of care.28 Standardization of observation status criteria and consistent reimbursement for observation services may be necessary for hospitals to develop operationally and physically distinct OUs, which may be essential to achieving the proposed benefits of observation medicine on costs of care, patient flow, and hospital capacity.

LIMITATIONS

Our study results should be interpreted with the following limitations in mind. First, the surveys were distributed only to freestanding children's hospitals who participate in PHIS. As a result, our findings may not be generalizable to the experiences of other children's hospitals or general hospitals caring for children. Questions in Survey 2 were focused on understanding observation care, delivered to patients following ED care, which may differ from observation practices related to a direct admission or following scheduled procedures, tests, or treatments. It is important to note that, hospitals that do not report observation status patient data to PHIS are still providing care to children with acute conditions that respond to brief periods of hospital treatment, even though it is not labeled observation. However, it was beyond the scope of this study to characterize the care delivered to all patients who experience a short stay.

The second main limitation of our study is the lower response rate to Survey 2. In addition, several surveys contained incomplete responses which further limits our sample size for some questions, specifically those related to utilization review. The lower response to Survey 2 could be related to the timing of the distribution of the 2 surveys, or to the information contained in the introductory e‐mail describing Survey 2. Hospitals with designated observation units, or where observation status care has been receiving attention, may have been more likely to respond to our survey, which may bias our results to reflect the experiences of hospitals experiencing particular successes or challenges with observation status care. A comparison of known hospital characteristics revealed no differences between hospitals that did and did not provide responses to Survey 2, but other unmeasured differences may exist.

CONCLUSION

Observation status is assigned using duration of treatment, clinical care guidelines, and level of care criteria, and is defined differently by individual hospitals and payers. Currently, the most widely available setting for pediatric observation status is within a virtual inpatient unit. Our results suggest that the care delivered to observation patients in virtual inpatient units is consistent with care provided to other inpatients. As such, observation status is largely an administrative/billing designation, which does not appear to reflect differences in clinical care. A consistent approach to the assignment of patients to observation status, and treatment of patients under observation among hospitals and payers, may be necessary to compare quality outcomes. Studies of the clinical care delivery and processes of care for short‐stay patients are needed to optimize models of pediatric observation care.

Observation medicine has grown in recent decades out of changes in policies for hospital reimbursement, requirements for patients to meet admission criteria to qualify for inpatient admission, and efforts to avoid unnecessary or inappropriate admissions.1 Emergency physicians are frequently faced with patients who are too sick to be discharged home, but do not clearly meet criteria for an inpatient status admission. These patients often receive extended outpatient services (typically extending 24 to 48 hours) under the designation of observation status, in order to determine their response to treatment and need for hospitalization.

Observation care delivered to adult patients has increased substantially in recent years, and the confusion around the designation of observation versus inpatient care has received increasing attention in the lay press.27 According to the Centers for Medicare and Medicaid Services (CMS)8:

Observation status is an administrative label that is applied to patients who do not meet inpatient level of care criteria, as defined by third parties such as InterQual. These criteria usually include a combination of the patient's clinical diagnoses, severity of illness, and expected needs for monitoring and interventions, in order to determine the admission status to which the patient may be assigned (eg, observation, inpatient, or intensive care). Observation services can be provided, in a variety of settings, to those patients who do not meet inpatient level of care but require a period of observation. Some hospitals provide observation care in discrete units in the emergency department (ED) or specific inpatient unit, and others have no designated unit but scatter observation patients throughout the institution, termed virtual observation units.9

For more than 30 years, observation unit (OU) admission has offered an alternative to traditional inpatient hospitalization for children with a variety of acute conditions.10, 11 Historically, the published literature on observation care for children in the United States has been largely based in dedicated emergency department OUs.12 Yet, in a 2001 survey of 21 pediatric EDs, just 6 reported the presence of a 23‐hour unit.13 There are single‐site examples of observation care delivered in other settings.14, 15 In 2 national surveys of US General Hospitals, 25% provided observation services in beds adjacent to the ED, and the remainder provided observation services in hospital inpatient units.16, 17 However, we are not aware of any previous multi‐institution studies exploring hospital‐wide practices related to observation care for children.

Recognizing that observation status can be designated using various standards, and that observation care can be delivered in locations outside of dedicated OUs,9 we developed 2 web‐based surveys to examine the current models of pediatric observation medicine in US children's hospitals. We hypothesized that observation care is most commonly applied as a billing designation and does not necessarily represent care delivered in a structurally or functionally distinct OU, nor does it represent a difference in care provided to those patients with inpatient designation.

METHODS

DATA ANALYSIS

Survey responses were collected and are presented as a descriptive summary of results. Hospital characteristics were summarized with medians and interquartile ranges for continuous variables, and with percents for categorical variables. Characteristics were compared between hospitals that responded and those that did not respond to Survey 2 using Wilcoxon rank‐sum tests and chi‐square tests as appropriate. All analyses were performed using SAS v.9.2 (SAS Institute, Cary, NC), and a P value <0.05 was considered statistically significant. The study was reviewed by the University of Michigan Institutional Review Board and considered exempt.

RESULTS

Responses to Survey 1 were available from 37 of 42 (88%) of PHIS hospitals (Figure 1). For Survey 2, we received responses from 20 of 42 (48%) of PHIS hospitals. Based on information available from Survey 1, we know that 20 of the 31 (65%) PHIS hospitals that report observation status patient data to PHIS responded to Survey 2. Characteristics of the hospitals responding and not responding to Survey 2 are presented in Table 1. Respondents provided hospital identifying information which allowed for the linkage of data, from Survey 1, to 17 of the 20 hospitals responding to Survey 2. We did not have information available to link responses from 3 hospitals.

Figure 1

Based on responses to the surveys and our knowledge of data reported to PHIS, our current understanding of patient flow from ED through observation to discharge home, and the application of observation status to the encounter, is presented in Figure 2. According to free‐text responses to Survey 1, various methods were applied to designate observation status (gray shaded boxes in Figure 2). Fixed‐choice responses to Survey 2 revealed that observation status patients were cared for in a variety of locations within hospitals, including ED beds, designated observation units, and inpatient beds (dashed boxes in Figure 2). Not every facility utilized all of the listed locations for observation care. Space constraints could dictate the location of care, regardless of patient status (eg, observation vs inpatient), in hospitals with more than one location of care available to observation patients. While patient status could change during a visit, only the final patient status at discharge enters the administrative record submitted to PHIS (black boxes in Figure 2). Facility charges for observation remained a part of the visit record and were reported to PHIS. Hospitals may or may not bill for all assigned charges depending on patient status, length of stay, or other specific criteria determined by contracts with individual payers.

Figure 2

DISCUSSION

This is the largest descriptive study of pediatric observation status practices in US freestanding children's hospitals and, to our knowledge, the first to include information about both the ED and inpatient treatment environments. There are two important findings of this study. First, designated OUs were uncommon among the group of freestanding children's hospitals that reported observation patient data to PHIS in 2010. Second, despite the fact that hospitals reported observation care was delivered in a variety of settings, virtual inpatient observation status was nearly ubiquitous. Among the subset of hospitals that provided information about the clinical care delivered to patients admitted under virtual inpatient observation, hospitals frequently reported there were no differences in the care delivered to observation patients when compared with other inpatients.

The results of our survey indicate that designated OUs are not a commonly available model of observation care in the study hospitals. In fact, the vast majority of the hospitals used virtual inpatient observation care, which did not differ from the care delivered to a child admitted as an inpatient. ED‐based OUs, which often provide operationally and physically distinct care to observation patients, have been touted as cost‐effective alternatives to inpatient care,1820 resulting in fewer admissions and reductions in length of stay19, 20 without a resultant increase in return ED‐visits or readmissions.2123 Research is needed to determine the patient‐level outcomes for short‐stay patients in the variety of available treatment settings (eg, physically or operationally distinct OUs and virtual observation), and to evaluate these outcomes in comparison to results published from designated OUs. The operationally and physically distinct features of a designated OU may be required to realize the benefits of observation attributed to individual patients.

While observation care has been historically provided by emergency physicians, there is increasing interest in the role of inpatient providers in observation care.9 According to our survey, children were admitted to observation status directly from clinics, following surgical procedures, scheduled tests and treatment, or after evaluation and treatment in the ED. As many of these children undergo virtual observation in inpatient areas, the role of inpatient providers, such as pediatric hospitalists, in observation care may be an important area for future study, education, and professional development. Novel models of care, with hospitalists collaborating with emergency physicians, may be of benefit to the children who require observation following initial stabilization and treatment in the ED.24, 25

We identified variation between hospitals in the methods used to assign observation status to an episode of care, including a wide range of length of stay criteria and different approaches to utilization review. In addition, the criteria payers use to reimburse for observation varied between payers, even within individual hospitals. The results of our survey may be driven by issues of reimbursement and not based on a model of optimizing patient care outcomes using designated OUs. Variations in reimbursement may limit hospital efforts to refine models of observation care for children. Designated OUs have been suggested as a method for improving ED patient flow,26 increasing inpatient capacity,27 and reducing costs of care.28 Standardization of observation status criteria and consistent reimbursement for observation services may be necessary for hospitals to develop operationally and physically distinct OUs, which may be essential to achieving the proposed benefits of observation medicine on costs of care, patient flow, and hospital capacity.

LIMITATIONS

Our study results should be interpreted with the following limitations in mind. First, the surveys were distributed only to freestanding children's hospitals who participate in PHIS. As a result, our findings may not be generalizable to the experiences of other children's hospitals or general hospitals caring for children. Questions in Survey 2 were focused on understanding observation care, delivered to patients following ED care, which may differ from observation practices related to a direct admission or following scheduled procedures, tests, or treatments. It is important to note that, hospitals that do not report observation status patient data to PHIS are still providing care to children with acute conditions that respond to brief periods of hospital treatment, even though it is not labeled observation. However, it was beyond the scope of this study to characterize the care delivered to all patients who experience a short stay.

The second main limitation of our study is the lower response rate to Survey 2. In addition, several surveys contained incomplete responses which further limits our sample size for some questions, specifically those related to utilization review. The lower response to Survey 2 could be related to the timing of the distribution of the 2 surveys, or to the information contained in the introductory e‐mail describing Survey 2. Hospitals with designated observation units, or where observation status care has been receiving attention, may have been more likely to respond to our survey, which may bias our results to reflect the experiences of hospitals experiencing particular successes or challenges with observation status care. A comparison of known hospital characteristics revealed no differences between hospitals that did and did not provide responses to Survey 2, but other unmeasured differences may exist.

CONCLUSION

Observation status is assigned using duration of treatment, clinical care guidelines, and level of care criteria, and is defined differently by individual hospitals and payers. Currently, the most widely available setting for pediatric observation status is within a virtual inpatient unit. Our results suggest that the care delivered to observation patients in virtual inpatient units is consistent with care provided to other inpatients. As such, observation status is largely an administrative/billing designation, which does not appear to reflect differences in clinical care. A consistent approach to the assignment of patients to observation status, and treatment of patients under observation among hospitals and payers, may be necessary to compare quality outcomes. Studies of the clinical care delivery and processes of care for short‐stay patients are needed to optimize models of pediatric observation care.

Observation medicine has grown in recent decades out of changes in policies for hospital reimbursement, requirements for patients to meet admission criteria to qualify for inpatient admission, and efforts to avoid unnecessary or inappropriate admissions.1 Emergency physicians are frequently faced with patients who are too sick to be discharged home, but do not clearly meet criteria for an inpatient status admission. These patients often receive extended outpatient services (typically extending 24 to 48 hours) under the designation of observation status, in order to determine their response to treatment and need for hospitalization.

Observation care delivered to adult patients has increased substantially in recent years, and the confusion around the designation of observation versus inpatient care has received increasing attention in the lay press.27 According to the Centers for Medicare and Medicaid Services (CMS)8:

Observation status is an administrative label that is applied to patients who do not meet inpatient level of care criteria, as defined by third parties such as InterQual. These criteria usually include a combination of the patient's clinical diagnoses, severity of illness, and expected needs for monitoring and interventions, in order to determine the admission status to which the patient may be assigned (eg, observation, inpatient, or intensive care). Observation services can be provided, in a variety of settings, to those patients who do not meet inpatient level of care but require a period of observation. Some hospitals provide observation care in discrete units in the emergency department (ED) or specific inpatient unit, and others have no designated unit but scatter observation patients throughout the institution, termed virtual observation units.9

For more than 30 years, observation unit (OU) admission has offered an alternative to traditional inpatient hospitalization for children with a variety of acute conditions.10, 11 Historically, the published literature on observation care for children in the United States has been largely based in dedicated emergency department OUs.12 Yet, in a 2001 survey of 21 pediatric EDs, just 6 reported the presence of a 23‐hour unit.13 There are single‐site examples of observation care delivered in other settings.14, 15 In 2 national surveys of US General Hospitals, 25% provided observation services in beds adjacent to the ED, and the remainder provided observation services in hospital inpatient units.16, 17 However, we are not aware of any previous multi‐institution studies exploring hospital‐wide practices related to observation care for children.

Recognizing that observation status can be designated using various standards, and that observation care can be delivered in locations outside of dedicated OUs,9 we developed 2 web‐based surveys to examine the current models of pediatric observation medicine in US children's hospitals. We hypothesized that observation care is most commonly applied as a billing designation and does not necessarily represent care delivered in a structurally or functionally distinct OU, nor does it represent a difference in care provided to those patients with inpatient designation.

METHODS

DATA ANALYSIS

Survey responses were collected and are presented as a descriptive summary of results. Hospital characteristics were summarized with medians and interquartile ranges for continuous variables, and with percents for categorical variables. Characteristics were compared between hospitals that responded and those that did not respond to Survey 2 using Wilcoxon rank‐sum tests and chi‐square tests as appropriate. All analyses were performed using SAS v.9.2 (SAS Institute, Cary, NC), and a P value <0.05 was considered statistically significant. The study was reviewed by the University of Michigan Institutional Review Board and considered exempt.

RESULTS

Responses to Survey 1 were available from 37 of 42 (88%) of PHIS hospitals (Figure 1). For Survey 2, we received responses from 20 of 42 (48%) of PHIS hospitals. Based on information available from Survey 1, we know that 20 of the 31 (65%) PHIS hospitals that report observation status patient data to PHIS responded to Survey 2. Characteristics of the hospitals responding and not responding to Survey 2 are presented in Table 1. Respondents provided hospital identifying information which allowed for the linkage of data, from Survey 1, to 17 of the 20 hospitals responding to Survey 2. We did not have information available to link responses from 3 hospitals.

Figure 1

Based on responses to the surveys and our knowledge of data reported to PHIS, our current understanding of patient flow from ED through observation to discharge home, and the application of observation status to the encounter, is presented in Figure 2. According to free‐text responses to Survey 1, various methods were applied to designate observation status (gray shaded boxes in Figure 2). Fixed‐choice responses to Survey 2 revealed that observation status patients were cared for in a variety of locations within hospitals, including ED beds, designated observation units, and inpatient beds (dashed boxes in Figure 2). Not every facility utilized all of the listed locations for observation care. Space constraints could dictate the location of care, regardless of patient status (eg, observation vs inpatient), in hospitals with more than one location of care available to observation patients. While patient status could change during a visit, only the final patient status at discharge enters the administrative record submitted to PHIS (black boxes in Figure 2). Facility charges for observation remained a part of the visit record and were reported to PHIS. Hospitals may or may not bill for all assigned charges depending on patient status, length of stay, or other specific criteria determined by contracts with individual payers.

Figure 2

DISCUSSION

This is the largest descriptive study of pediatric observation status practices in US freestanding children's hospitals and, to our knowledge, the first to include information about both the ED and inpatient treatment environments. There are two important findings of this study. First, designated OUs were uncommon among the group of freestanding children's hospitals that reported observation patient data to PHIS in 2010. Second, despite the fact that hospitals reported observation care was delivered in a variety of settings, virtual inpatient observation status was nearly ubiquitous. Among the subset of hospitals that provided information about the clinical care delivered to patients admitted under virtual inpatient observation, hospitals frequently reported there were no differences in the care delivered to observation patients when compared with other inpatients.

The results of our survey indicate that designated OUs are not a commonly available model of observation care in the study hospitals. In fact, the vast majority of the hospitals used virtual inpatient observation care, which did not differ from the care delivered to a child admitted as an inpatient. ED‐based OUs, which often provide operationally and physically distinct care to observation patients, have been touted as cost‐effective alternatives to inpatient care,1820 resulting in fewer admissions and reductions in length of stay19, 20 without a resultant increase in return ED‐visits or readmissions.2123 Research is needed to determine the patient‐level outcomes for short‐stay patients in the variety of available treatment settings (eg, physically or operationally distinct OUs and virtual observation), and to evaluate these outcomes in comparison to results published from designated OUs. The operationally and physically distinct features of a designated OU may be required to realize the benefits of observation attributed to individual patients.

While observation care has been historically provided by emergency physicians, there is increasing interest in the role of inpatient providers in observation care.9 According to our survey, children were admitted to observation status directly from clinics, following surgical procedures, scheduled tests and treatment, or after evaluation and treatment in the ED. As many of these children undergo virtual observation in inpatient areas, the role of inpatient providers, such as pediatric hospitalists, in observation care may be an important area for future study, education, and professional development. Novel models of care, with hospitalists collaborating with emergency physicians, may be of benefit to the children who require observation following initial stabilization and treatment in the ED.24, 25

We identified variation between hospitals in the methods used to assign observation status to an episode of care, including a wide range of length of stay criteria and different approaches to utilization review. In addition, the criteria payers use to reimburse for observation varied between payers, even within individual hospitals. The results of our survey may be driven by issues of reimbursement and not based on a model of optimizing patient care outcomes using designated OUs. Variations in reimbursement may limit hospital efforts to refine models of observation care for children. Designated OUs have been suggested as a method for improving ED patient flow,26 increasing inpatient capacity,27 and reducing costs of care.28 Standardization of observation status criteria and consistent reimbursement for observation services may be necessary for hospitals to develop operationally and physically distinct OUs, which may be essential to achieving the proposed benefits of observation medicine on costs of care, patient flow, and hospital capacity.

LIMITATIONS

Our study results should be interpreted with the following limitations in mind. First, the surveys were distributed only to freestanding children's hospitals who participate in PHIS. As a result, our findings may not be generalizable to the experiences of other children's hospitals or general hospitals caring for children. Questions in Survey 2 were focused on understanding observation care, delivered to patients following ED care, which may differ from observation practices related to a direct admission or following scheduled procedures, tests, or treatments. It is important to note that, hospitals that do not report observation status patient data to PHIS are still providing care to children with acute conditions that respond to brief periods of hospital treatment, even though it is not labeled observation. However, it was beyond the scope of this study to characterize the care delivered to all patients who experience a short stay.

The second main limitation of our study is the lower response rate to Survey 2. In addition, several surveys contained incomplete responses which further limits our sample size for some questions, specifically those related to utilization review. The lower response to Survey 2 could be related to the timing of the distribution of the 2 surveys, or to the information contained in the introductory e‐mail describing Survey 2. Hospitals with designated observation units, or where observation status care has been receiving attention, may have been more likely to respond to our survey, which may bias our results to reflect the experiences of hospitals experiencing particular successes or challenges with observation status care. A comparison of known hospital characteristics revealed no differences between hospitals that did and did not provide responses to Survey 2, but other unmeasured differences may exist.

CONCLUSION

Observation status is assigned using duration of treatment, clinical care guidelines, and level of care criteria, and is defined differently by individual hospitals and payers. Currently, the most widely available setting for pediatric observation status is within a virtual inpatient unit. Our results suggest that the care delivered to observation patients in virtual inpatient units is consistent with care provided to other inpatients. As such, observation status is largely an administrative/billing designation, which does not appear to reflect differences in clinical care. A consistent approach to the assignment of patients to observation status, and treatment of patients under observation among hospitals and payers, may be necessary to compare quality outcomes. Studies of the clinical care delivery and processes of care for short‐stay patients are needed to optimize models of pediatric observation care.