The Real Cost of Caring for Kids: Why Children’s Hospitals Require Different Metrics

Just as children are not tiny adults, children’s hospitals are not adult hospitals softened by colorful, kid-friendly decor. Yet when it comes to quality and costs, children’s hospitals are often benchmarked against adult hospitals that provide pediatric care.

This apples-to-oranges comparison not only fails to capture the intricacies of children’s hospitals, but it also derails the ability of children’s hospitals to compare their performance with peers. Peer benchmarking helps identify operational opportunities, stimulate quality improvement efforts, and drive process changes that improve patient care and financial resiliency.

Adult hospitals may benchmark against competitive or functional groups. For example, tertiary centers compare operational and financial metrics against similarly sized hospitals in the same market, or specialty hospitals compare their metrics to other such facilities.

However, identifying appropriate benchmarking groups isn’t as clear cut for children’s hospitals.

What sets children’s hospitals apart?

Children’s hospitals treat a broad range of pediatric illnesses and conditions — from common health problems like asthma and gastroenteritis to complex medical conditions requiring specialized surgeries, treatments, and organ transplants.

They care for tiny, medically fragile neonates as well as adult-sized teens. They help build a robust pediatric workforce by training pediatricians and pediatric specialists. They customize electronic medical records and equipment to meet pediatric-specific needs, and they include more physical square footage to accommodate family members in patient care areas.

The combination of these factors means children’s hospitals have more diverse patient populations that cost significantly more to treat. Specifically, five pediatric patient populations drive additional costs at children’s hospitals compared to adult hospitals providing pediatric care:

• High-severity neonatal populations requiring major procedures.
• High-severity pediatric patients requiring artificial life support like mechanical ventilation or extracorporeal membrane oxygenation (ECMO).
• Pediatric patients requiring cancer care, like chemotherapy or bone marrow transplants.
• High-severity patients requiring repair of heart anomalies.
• Patients with major disseminated infections like sepsis.

Apples-to-apples comparisons

The Children’s Hospital Association (CHA) arrived at these cost drivers using methods designed to help our members identify appropriate benchmark hospitals by analyzing the severity of their patient population and scope of services. In other words, our methods enable apples-to-apples comparisons so children’s hospitals can more accurately identify benchmark groups.

The first method is the Hospitalization Resource Intensity Scores for Kids (H-RISK). The H-RISK assigns a pediatric-specific relative weight to each reason for hospitalizations based on its severity. The scores make it possible to compare the intensity of resource utilization across all patients at a children’s hospital. Organ and bone marrow transplant recipients and neonates account for some of the highest relative weights with free-standing children's hospitals having an H-RISK nearly three times that of other hospitals that care for children.

The second method identifies the scope of pediatric services a hospital offers by normalizing the number of conditions for which the hospital offers care. The Hospital Diagnosis Diversity Index (HDDI) shows hospitals with more diverse patient populations have higher costs. For example, free-standing children’s hospitals have a HDDI 9.2 times higher than non-children's hospitals and an associated cost 2.6 times higer. This can explain cost variances beyond patient-level characteristics.

Benchmarking industry trends

The Children’s Hospitals Landscape Report is a third way CHA helps children’s hospitals benchmark against peers. This report provides a high-level look at industry volume trends specific to children’s hospitals. The report draws from our Pediatric Health Information System (PHIS®) and PROSPECT℠ databases, which contain clinical and financial data from more than 50 leading U.S. children’s hospitals.

Many hospital industry reports focus on volume and operational metrics from a broad cross section of the nation’s hospitals. These may include academic medical centers, community hospitals, critical access hospitals, tertiary referral centers as well as children’s hospitals.

Our Children’s Hospital Landscape Report draws data exclusively from children’s hospitals. This enables children’s hospitals to benchmark their performance against peers instead of adult-focused facilities that also offer pediatric services. The report breaks clinical volumes down by care setting and geography, which offers pediatric hospitals a deeper level of comparable benchmarking.

The latest version of the Children’s Hospitals Landscape Report is now available. In it, you’ll see inpatient volumes trending positively in all areas of the country. Emergency department volumes in 2024 outpaced volumes in 2023 while the number of surgical cases has grown by nearly 26% since 2021.

Children’s hospitals can use the report to monitor industry trends and gain insights into key performance indicators across the health care sector while also tracking organizational performance against industry averages.

Since children’s hospitals are intrinsically different from adult hospitals, leveling the playing field is vital when benchmarking for quality improvement projects or operational efficiency initiatives.

Our tools can help children’s hospitals successfully identify peer hospitals appropriate for comparison. Learn more about CHA’s data tools that are designed specifically for children’s hospitals.