Estimating the Variance of Standardized Rates of Recurrent Events, with Application to Hospitalizations among the Elderly in New England

Usual approaches for estimating the variance of a standardized rate may not be applicable to rates of recurrent events. Where individuals are prone to repeated health events, Greenwood and Yule (J R Stat Soc A, 1920;83:255-79) advocated use of the negative binomial distribution to account for departures from the assumption of randomness of recurrent events required by the Poisson distribution. In this paper, the authors implemented the negative binomial distribution in the computation of annual hospitalization rates within certain hospital market areas. Data used were from 1,549,915 New England residents aged 65 years or more who were enrolled in Medicare between October 1, 1988, and September 30, 1989, and who had 458,593 hospital admissions during that year. New England was partitioned into 170 hospital market areas ranging in population size from 162 to 70,821 elderly Medicare enrollees. The negative binomial distribution demonstrated substantially better fits than the Poisson distribution to the numbers of hospitalizations within hospital market areas. Estimated standard errors for indirectly standardized rates based on the negative binomial distribution were 25-51 percent higher than estimated standard errors that assumed an underlying Poisson distribution. Using regression analysis to smooth overdispersion parameters across hospital market areas produced similar results. The approach described in this paper may be useful in estimation of confidence intervals for standardized rates of recurrent events when these events do not recur randomly.