Bloomberg News

Hospitals Risk Revenue Cuts as They Fail to Reduce Readmissions

September 28, 2011

Sept. 28 (Bloomberg) -- U.S. hospitals risk cuts in Medicare payments next year after failing to reduce avoidable readmissions, a Dartmouth Atlas Project study showed.

The report tracked 10.7 million discharges at 1,925 hospitals from 2004 to 2009 and found that readmissions of elderly patients within 30 days of a hospital stay have remained the same or increased. Earlier work by the Lebanon, New Hampshire-based research group influenced strategies in President Barack Obama’s 2010 health-care overhaul.

Avoidable readmissions cost Medicare, the federal health plan for the elderly and disabled, at least $17 billion annually, according to U.S. estimates quoted by the Dartmouth group. The Centers for Medicare and Medicaid Services in Baltimore plans to cut payments by 1 percent to hospitals with excessive rates starting in fiscal 2013.

“This report should be a wakeup call for hospitals,” said David Goodman, a physician and co-author of the Dartmouth Atlas study. “It clearly shows how far we have to go and how difficult it’s going to be to get there.”

The 30-day readmission rate following a surgery was 12.7 percent nationally in 2004 and 2009. The rate after an illness rose to 16.1 percent in 2009 from 15.9 percent in 2004.

Academic Medical Centers

The medical and surgical readmission rates of about half of the 94 academic medical centers surveyed increased during the four years. Among those with the largest statistically significant jumps were Montefiore Medical Center in New York, Albany Medical Center in Albany, New York, and University Hospitals Case Medical Centers in Cleveland, all of which gained 3.8 percentage points for surgical readmissions. The University of Connecticut Health Center in Farmington, Connecticut saw its medical readmission rate rise 4.8 percentage points and Nebraska Medical Center in Omaha climbed 4.6 points.

The academic medical centers with the largest drops in surgical readmissions were the University of Missouri Hospital and Clinic in Columbia, Missouri, which fell 5.2 percentage points, and Oklahoma University Medical Center in Oklahoma City, which dipped 3.9 percentage points. Chicago-based Northwestern Memorial Hospital’s medical readmission rate dropped 3.2 points.

Other medical centers that experienced an increase in the rate of readmitted patients were New York Presbyterian Hospital, a gain of 3.3 percentage points for surgical readmissions and 2.2 for medical; Massachusetts General Hospital, an increase of 2 percentage points for medical readmissions; and Dartmouth Hitchcock Medical Center, based in Lebanon, New Hampshire, up 2.7 points in surgical readmissions.

No Monitoring

The persistent readmission rate is caused by a lack of early follow-up with patients and caregivers to ensure they understand and heed doctors’ orders, Goodman said in a telephone interview. Often too, patients are treated for the illness that landed them in the hospital, even though they are suffering from other conditions that will send them back weeks or even days later, he said.

U.S. payment systems have also tended to reward fragmented care, Goodman said. Many hospitals don’t change their practices because they benefit in the short run from higher revenue that comes from readmissions, he said.

“So it has remained business as usual for the last few years,” Goodman said. “Yet, when Medicare starts penalizing them, you know there will be complaints.”

The agency’s penalties will rise from the 1 percent payment cut in fiscal 2013 to 2 percent in fiscal 2014 and 3 percent in 2015. While hospitals are likely to improve Readmission rates before the penalties kick in, the nation shouldn’t focus on what happens to a patient after only 30 days, Goodman said.

“The health care system needs more than just 30 days responsibility for a patient population,” Goodman said. “Tell me what happens on day 31 and day 90.”

--Editors: Chris Staiti, Andrew Pollack

To contact the reporter on this story: Pat Wechsler in New York at

To contact the editor responsible for this story: Reg Gale at

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