Observation Rates At Veterans Hospitals More Than Doubled During 200513 Similar To Medicare Trends

When neither inpatient admission nor prompt discharge is clearly indicated for a patient in the emergency department, physicians place the patient under observation in a hospital for diagnosis and treatment. The increasing prevalence of observation stays at hospitals reimbursed by Medicare is receiving considerable attention, but the prevalence remains unexplored in Veterans Health Administration (VHA) hospitals, which are subject to different payment policies. Using VHA data for fiscal years 2005–13, we identified trends and variations in observation rates across twenty-one Veteran Integrated Service Networks and 128 VHA hospitals nationwide. We found that observation rates across VHA hospitals more than doubled, from 6.5 percent to 13.8 percent, and that there was substantial variation across both Veteran Integrated Service Networks and hospitals. The most prevalent diagnoses accounted for an increasing share of observation stays over time. Despite different incentives within the VHA and Medicare, rates of observation have increased over time for both populations.