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A Mathematical Theory for Identifying and Measuring Severity of Episodes of Care

Alemi, Farrokh PhD; Walters, Samuel R. BS

Quality Management in Health Care: April-June 2006 - Volume 15 - Issue 2 - p 72–82

Objectives We propose and test a method for constructing episodes of care from data within administrative databases and electronic health records.

Subjects We created a measure for severity of episodes of illness for 565 randomly chosen developmentally delayed children who were enrolled in the Medicaid program.

Design Regression analysis was conducted to test the percentage of variance explained by our proposed mathematical model in cost of care.

Data Collection Data included both hospitalizations and clinic visits obtained from Medicaid programs from one southeastern state.

Methods For each patient, the likelihood that two diagnoses are part of the same episode is proportional to the similarity of the two diagnoses and to the short time interval between them. When this likelihood exceeds a preset cutoff, then the two diagnoses are part of the same episode. The cutoff is estimated by selecting number of days before two very similar diagnoses are considered to be part of separate episodes. The similarity between two diagnoses is assumed to be proportional to co-occurrence of the two diagnoses within a fixed period (usually 30 days). The severity of an episode was calculated using a Muliplicative Multiattribute Utility model, where severity of each diagnosis is aggregated to estimate the overall severity of the episode. Severity of each diagnosis was assumed to be proportional to average cost of a diagnosis—if patients do not die before care is delivered. The article includes an algorithm that can classify a patient's diagnosis into episodes of care and measure severity of the episodes from date of diagnoses, code for the diagnoses, and charges for the visit. To facilitate integration with existing database, the article includes a Standard Query Language computer program. To evaluate the method of constructing episodes of care, we regressed cost of care on the patient's number of episodes of care within the year, average severity of the episodes within the year, and the interaction between number and average severity of the episodes.

Results The number of episodes (α = .001), the average severity of the episodes (α = .001), and the product of the two (α = .001) had statistically significant relationships to the average cost of the case. The 3 variables together explained 53% of variation in yearly cost of care.

Conclusions These data suggest that our proposed mathematical approach is reasonable and produces severity scores that are predictive of objective criteria such as cost of care.

Department of Health Administration & Policy (Dr Alemi), George Mason University, Fairfax, Va; and the National Association of Children's Hospitals and Related Institutions (Mr Walters), Alexandria, Va.

Corresponding author: Farrokh Alemi, PhD, Department of Health Administration & Policy, George Mason University, 4400 University Dr, Fairfax, VA 22030 (e-mail:

This paper based on patent application 10/054,706 filed on January 24, 2002 by George Mason University. The authors grant permission to individual scientists within university and federal and state governments settings to use these procedures free of licensing fees for the purpose of evaluating its effectiveness if they obtain prior permission from Office of Technology Transfer at George Mason University. A database implementation of this algorithm is available through the first author. The methodology for identifying episodes of care was constructed while Farrokh Alemi was at George Mason University and collaborating with P. J. Maddox, PhD, and Valentin Prudius.

©2006Lippincott Williams & Wilkins, Inc.