Predictive Hierarchical Clustering: Learning clusters of CPT codes for improving surgical outcomes

We develop a novel algorithm, Predictive Hierarchical Clustering (PHC), for agglomerative hierarchical clustering of current procedural terminology (CPT) codes. Our predictive hierarchical clustering aims to cluster subgroups, not individual observations, found within our data, such that the clusters discovered result in optimal performance of a classification model. Therefore, merges are chosen based on a Bayesian hypothesis test, which chooses pairings of the subgroups that result in the best model fit, as measured by held out predictive likelihoods. We place a Dirichlet prior on the probability of merging clusters, allowing us to adjust the size and sparsity of clusters. The motivation is to predict patient-specific surgical outcomes using data from ACS NSQIP (American College of Surgeon's National Surgical Quality Improvement Program). An important predictor of surgical outcomes is the actual surgical procedure performed as described by a CPT code. We use PHC to cluster CPT codes, represented as subgroups, together in a way that enables us to better predict patient-specific outcomes compared to currently used clusters based on clinical judgment.