Hospitals release patients as early as possible to minimize care expenses. Health plans and the government determine in advance how much they will pay the hospital based on the patient’s condition. There is one price for the entire hospital stay, rather than a charge for every service and supply used. Medicare has a list of about 750 diagnostically related groups of similar medical episodes.
This is a cost-containment strategy. The incentive is to release the patient on or before the reimbursement period runs out. Unfortunately, too many come back for additional care within a month. This may be a penny-wise, pound-foolish situation. Initial costs were minimized but overall costs likely increased. Hospitals are able to bill the government or health plans for another hospitalization.
Hip replacement illustrates the point. In the early 1990s, according to a study in the Journal of the American Medical Association, patients spent more than nine days, on average, for surgery and recuperation in the hospital. By 2008, that period was less than four days. The percentage of patients sent directly home decreased from about two-thirds to less than half. The proportion sent instead to rehabilitation facilities doubled. Furthermore, there was a 44 percent increase in the number of patients returning to the hospital within 30 days for further care.
Dr. Peter Cram, the study’s lead author, said, “You’re really just squeezing a balloon here. If we reduce the length of stay in the hospital, we can save money … But when we squeeze the balloon on one end to reduce length of stay, other costs pop up on the other end. This is why it’s so hard to reduce or contain health-care costs.”
A key provision of the health-reform law attempts to reduce 30-day hospital readmission rates by penalizing the worst offenders. As of October 2012, Centers for Medicare and Medicaid Services can decrease payments by 1 percent to hospitals with excessive rates for patients with heart failure, acute myocardial infarction or pneumonia.
One in 5 Medicare beneficiaries was readmitted to the hospital within 30 days, and 1 in 3 within 90 days in 2003-2004. The cost of these unplanned readmissions was more than $17 billion in 2004. Blacks are 43 percent more likely to have unplanned readmissions. The risk is up to 33 percent more likely for those on high-risk medications.
The Joint Commission, which accredits hospitals, studied miscommunication from one caregiver to the next in 10 hospitals. These so-called transitions of care often are the culprit in readmissions. The commission found that handoffs were defective 37 percent of the time. There are 4,000 handoffs a day at a typical hospital, which means nearly 1,500 are mishandled. Those fumbled handoffs are associated with 80 percent of serious medical errors.
However, a recent study found that Medicare regions that have the highest readmission rates also have the highest hospital admission rates. In other words, doctors in some areas are quicker to stick – and re-stick – patients into the hospital than those elsewhere.
There are simply too many confounding factors to blame hospitals for readmission rates.