Severity of illness and the teaching hospital

In the current environment of cost containment pressures on health care providers, teaching hospitals are facing increased financial risks that could jeopardize their special role in the health care delivery system. One of these risks is that the Medicare prospective payment system does not adequately account for severity of illness. Whether teaching hospitals treat a case mix of patients with more severe illness than do nonteaching hospitals was tested in the study reported here using two severity measures, Horn's severity of illness index and Gonnella's "disease staging." Teaching hospitals were found to treat a significantly greater proportion of severely ill patients than community hospitals, especially when measured by the severity of illness index. Differences in case mix of severity of illness among hospitals can have a significant impact on patient care costs, which may not be adequately met by a reimbursement system based on diagnosis related groups. Hospital managers can use severity of illness measures to assess the resource needs of patients and the practice patterns of physicians. If severity of illness measures help describe the special burden of treatment that teaching hospitals bear, they should be used to establish the case for adequate financial support.