Providing optimal care to keep recovering patients healthy — and out of the hospital — is a longstanding and costly healthcare problem. Currently, 20 percent of Medicare patients are readmitted within 30 days of discharge, costing taxpayers at least $17 billion each year. As part of the 2010 Affordable Care Act, the Hospital Readmissions Reduction Program financially penalizes hospitals with higher than expected readmissions. With penalties set to rise in 2015, the pressure is on hospitals to find affordable solutions that reduce readmission rates.
Medicare patients have very high readmission rates for three conditions in particular: heart attack, congestive heart failure (the decreased ability of the heart to pump or fill with blood), and pneumonia. “The goal of the penalties is to provide an incentive for hospitals to reduce the rate of what in hospital jargon are known as preventable readmissions,” Professor Carri Chan says. She explains that to date, much of the focus in preventing readmissions has been on outpatient programs — making sure that patients follow up with a primary care physician, fill and take their prescriptions, and maintain healthy lifestyles. “There’s been a lot of push back from hospitals because they don’t feel that they should be penalized for what happens after a patient goes home, when they no longer have control over a patient’s care. We wanted to understand if there was something under hospitals’ control that could influence readmissions.”
Professor Ann Bartel and Chan, working with Song-Hee (Hailey) Kim of the Yale School of Management, decided to focus on the lengths of patients’ hospital stays, which have shortened over time, despite questions about how shorter stays affect readmission rates and patient outcomes. The researchers analyzed medical records from the Centers for Medicare and Medicaid of more than 6.6 million Medicare patients ages 65 or older with in-hospital visits between 2008 and 2011. They then comparing the potential benefits of a one-day extended hospital stay to those of outpatient care in terms of reduced readmissions in the 30 days following discharge, death rates, and costs.
To compare inpatient and outpatient care models, the research included patients covered by traditional Medicare and Medicare Advantage plans — two distinct payment approaches that present two different incentive problems for hospitals. Before the 2010 penalties were enacted, there was little incentive for hospitals to prevent readmissions because most payment plans pay hospital costs on a fee-for-service basis. On the other hand, the capped payment system for Medicare Advantage plans incentivized insurers to reduce excess readmissions, leading them to provide more outpatient care programs in an effort to keep patients out of the hospital.
The findings were decisive: one additional day in the hospital can reduce readmission risk by 7 percent for high severity heart failure patients. In the case of pneumonia and heart attack patients, one additional day in the hospital can reduce their mortality risks by 22 percent and 7 percent, respectively. When compared to outpatient management programs, one extra day in the hospital for pneumonia and heart attack patients resulted in five to six times more lives saved. Using hospital cost estimates and value of life estimates, Bartel, Chan, and Kim calculated that the value of the additional lives saved exceeded the costs of an extra day in the hospital for these patients.
“An extra day may allow patients more time to learn more about their post-discharge instructions or reach a higher level of stability,” Bartel says. Of course, she acknowledges that keeping patients in the hospital longer is not cheap. “But we find that inpatient care is more cost-effective in many cases, even if the outpatient programs are free. The bottom line: not only is keeping patients one more day good for taxpayers, but more importantly, you save so many more lives.”
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About the researcher
Professor Bartel is the Merrill Lynch Professor of Workforce Transformation at Columbia Business School and the Director of Columbia Business School's Workforce Transformation...Read more.
About the researcher
Professor Chan teaches the core MBA class, Operations Management. Her primary research interests are in data-driven modeling of complex stochastic systems, dynamic optimization, and...Read more.