High-cost users: drivers of inpatient healthcare expenditure concentration in urban China

The concentration of a disproportionate share of healthcare expenditures on a small proportion of patients, or high-cost users (HCU), is typical of healthcare expenditures everywhere. While this concentration, or skewness of health care expenditures, has been extensively documented [2, 28, 32], the evidence of medical spending concentration has mainly focused on developed countries. Empirical evidence from the United States revealed that the top 5% of healthcare spenders accounted for around 50% of total health care expenditures [1, 5, 15] and France and Japan showed a similar concentration, with the top 10% of patients accounting for more than 60% of all health care spending [13, 16]. Due to the lack of publicly available healthcare expenditure data and reliable large sample survey data, only a limited number of published studies have been carried out in developing countries. Using insurance claims data, Chen et al. [3] and Peng and Du [23] suggested that nearly 50% of inpatient medical expenditures in China were generated by the top 10% of patients. The concentration of outpatient expenditures in Iran was even higher, with the top 10% of patients accounting for 63% of the total ambulatory expenditure [8].

Given that a small subset of the patient population imposes a disproportionately high-cost burden on the health care system, one focus of the healthcare concentration expenditure literature has been on the assessment of the concentration, identifying and understanding the characteristics of these HCUs. HCUs are typically older, experience frequent hospitalizations, have lower incomes [14] and suffer multiple chronic common medical conditions, including cardiovascular disease, cancer, chronic obstructive pulmonary disease and diabetes [8, 17, 21].

Although extensive research has been conducted on the concentration of health care spending, what is less clear is the drivers of the skewed distribution of health care spending, particularly demographic characteristics and the disease profile. Utilizing patient claims data, we address three questions. First, we statistically describe the distribution of urban inpatient medical expenditures. Second, we identify the demographic and disease characteristics of HCUs that differentiate them from the other healthcare users. Third, we assess the underlying drivers of concentrated healthcare expenditures, such as the demographic and disease characteristics.

Little is known about the drivers of healthcare expenditure concentration in developing countries and especially in China. Using insurance claims data, we examined the concentration of healthcare expenditures and the drivers of urban inpatient healthcare expenditures. Our results revealed that Chinese healthcare expenditures were highly concentrated in a small subset of the insured, similar to empirical evidence from developed countries [1, 5, 13, 15, 16]. The top 10% of hospitalized groups accounted for approximately 49% of annual medical expenditures, or only 1.67% of the UEBMI insured consumed close to 50% of annual inpatient medical expenditures. This is generally consistent with the findings of Peng and Du [23] and Chen et al. [3] regarding the concentration of inpatient medical expenditures in China. Despite some evidence suggesting that concentration decreased with age [22] and varied by sex [13], our results for the ratio of average expenditure in the quintile revealed that concentration increased with age for both males and females. Sex differences existed in the concentration of inpatient medical expenditures, with males having a greater concentration than females in the same age group at all ages, but this difference decreased with age, disappearing by age 80.

One major contribution of our study was to deconstruct the drivers of high-cost user concentration of healthcare spending, by exploring the demographic and clinical characteristics of HCUs. Given the limitation of the insurance claim data to age and sex demographics [12], we first compared age-sex factors between distinct healthcare expenditure subgroups. Our results showed that HCUs were older and male, which is consistent with previous research on high-cost users [25] and explains the increase in the concentration of inpatient medical expenditures with population aging. In terms of disease profiles, it has been well documented that the high burden of comorbid diseases, especially multiple chronic status, is a major driver of health care spending [2, 25]. Our empirical evidence from China showed that the incidence of chronic diseases such as malignancy, heart disease, and cerebrovascular disease was significantly higher in HCUs than in non-HCUs and was often accompanied by overlapping chronic diseases. Our results also showed that the coexistence of multiple diseases increased the intensity of health care utilization among HCUs, resulting in higher number and length of hospital stays.

Our study is novel in that we quantify the drivers for inpatient expenditures concentration. Previous studies have confirmed the basic axiom that health care expenditures were concentrated in specific sex-age subgroups [15, 23] and identified a range of diseases that elevated the probability of being a HCUs [6, 14, 17]. However, with only qualitative assumptions [23], the impact of potential drivers on changes in concentration remains ambiguous, and a rigorous quantitative assessment lacking. To bridge this research gap, we examined the drivers of inpatient medical expenditure concentration using the recentered influence functions approach [11]. Our results show that if the proportion of malignant neoplasms increased by 10%, the predicted Gini coefficient would increase by 7.2%; a 10% rise in heart disease would increase the Gini coefficient by 0.92%; and a 10% rise in cerebrovascular disease would increase the Gini coefficient by 1.5%. Serious diseases, such as malignant neoplasms and cardiovascular diseases, were prominent predictors of the skewness of health care expenditures. In just a few decades, the burden of disease in China has shifted considerably, with the epidemiological transition from acute diseases, such as infectious diseases, neonatal diseases, and childhood diseases to chronic diseases, such as cardiovascular diseases, tumors, degenerative diseases, and geriatric diseases [30]. Given the shift in China’s disease spectrum, our results predict a direct rise in the concentration of inpatient medical expenditures. Furthermore, the prevalence of chronic diseases, and trends of specific chronic diseases, has increased [29]. For example, cardiovascular hospitalization costs increased by more than 20% annually since 2004 [20], stroke prevalence increased by 155% and the incidence increased by 31.6% in rural areas from 1980s to 2013 [26]. China’s age-standardized incidence rates of cancer have continued to increase [4]. The prevalence and spending on tumors and cardiovascular diseases will continue to rise as China's demographics reflect population aging, prolonged life expectancy, increased expectation of medical care, and declining mortality rates, as well as the accumulation of risk factors.

Our study has limitations and strengths. First, we used administrative claims data at a prefecture-level city in central China, with the findings generalizable to developing central regions of China but not the whole country. Administrative claims data are not available for public use, and permission to access the unique administrative claims data meant the central regions, but not the city, could be identified. Second, variables not recorded in the administrative claims data, such as income and educational attainment, were not available. On the positive side, the patient-based administrative records avoid sample selection bias and information recall bias [9] and provide accurately recorded medical expenditure information and reliable clinical diagnosis, which infects survey studies of healthcare spending concentration [7]. Finally, our data provided the concentration of inpatient medical expenditures of patients covered by Urban Employee Basic Medical Insurance), but we did not address outpatient expenditures or the medical expenditures of other health insurance schemes, especially of the unemployed, students and children.

Utilizing individual-based inpatient claims records, we provided abundant evidence on the characteristics and drivers of the concentration of inpatient medical expenditures in China. Medical expenditures exhibited an extreme skewed distribution, with a Gini coefficient of 0.588 and approximately 49% of annual inpatient medical expenditures generated by the top 10% of inpatient expenditures and the top 20% of inpatients accounting for 73.8% of inpatient expenditures. The predicted Gini coefficient would rise by 2.3% for an average increase of 1 day in the length of hospital stay, but the increase in tertiary care visits did not significantly increase concentration.

Our main contribution was to quantify the drivers of healthcare expenditure concentration. First, we found that HCUs tended to be elderly and male, with high frequency hospitalizations and long length of hospital stay. In terms of diseases profile, the top 10% of diagnoses were concentrated in diseases of the circulatory system, malignant neoplasms, diseases of the musculoskeletal system and connective tissue, diseases of the digestive system, injury, poisoning and certain other consequences of external causes, and diseases of the respiratory system. Among them, the incidence of ischemic heart disease, cerebrovascular diseases, and malignant neoplasms was high. We quantified the impact of the main disease drivers on healthcare expenditure concentration. With a 10% increase in the share of suffering from malignant neoplasms, the predicted Gini coefficient would increase by 7.2%; a 10% rise in heart disease would increase the Gini coefficient by 0.92%; and a 10% rise in cerebrovascular disease would increase the Gini coefficient by 1.5%. However, these significant positive effects on the concentration of inpatient expenditures were not observed in hypertension and diabetes. One reason might be that these diseases were mainly treated in outpatient health facilities.

Our study makes several contributions to the healthcare literature. First, with major shifts in China’s disease spectrum [30], our results show that changes in specific diseases will have a profound impact on the concentration of healthcare expenditures. To manage the increased HCU health expenditure concentration, healthcare administrators will need to invest in early detection and intervention management of specific chronic diseases and high-risk populations, especially the early diagnosis and treatment of key cancers. Finally, we extended and provided robust empirical evidence of the concentration of medical expenditures from a developing country.