Hospitals with risk-bearing or capitated contracts are more likely to see savings from readmission reduction initiatives.
Hospital readmissions have been declining since Medicare began penalizing hospitals for them in 2012, but a new meta-analysis questioned whether those organizations’ efforts are financially sustainable.
A systematic review and analysis of 50 previously published economic evaluations with data on more than 16,700 patients found that hospital readmission reduction programs inconsistently provided net savings to health systems. On average, such initiatives provided $972 in net savings per patient among heart failure patients, but a $169 net loss per patient among general populations. Net losses occurred in 20 percent of the readmissions studies.
“It does call into question whether there is a strong business case. Hospitals could spend a lot of money trying to reduce readmissions, and it may not yield much benefit beyond the simple things that they are already doing to make sure that people don’t bounce back to the hospital,” said Gloria Bazzoli, PhD, Bon Secours Professor at the Department of Health Administration of Virginia Commonwealth University.
An author of the research who found the lack of overall savings “unexpected and surprising” nonetheless noted that there likely are economic benefits of readmission reduction among the general population beyond the scope of the study. Other areas where such efforts might provide financial benefits include patient satisfaction, organizational reputation, and the chance to use vacated beds for higher-revenue activities.
Those potential benefits bolster the case for “cost-neutral” initiatives, said Teryl Nuckols, MD, MSHS, a study author and director, Division of General Internal Medicine, Cedars-Sinai Department of Medicine.
“We did not look at all of the other implications that go along with essentially improving quality while keeping costs at least the same,” Nuckols said. “If you can improve quality and keep costs the same, why not do it?”
Premier’s hospital members that focus on readmissions reduction efforts have found such initiatives pay off in numerous ways, including improvements in patients’ experience of care, communication efforts, the experience of the families and caregivers, and staff satisfaction.
Healthcare providers want patients to go home from the hospital and stay at home. They feel satisfaction when they’re able to make a difference in that way, said Madeleine Biondolillo, MD, vice president of engagement and delivery, Premier Inc.
The findings came as hospitals continue efforts to avoid Medicare penalties for higher readmission rates. The Centers for Medicare & Medicaid Services estimated that 2,588 out of 3,450 hospitals, or 75 percent, will have their base-operating DRG payments cut under the Hospital Readmissions Reduction Program (HRRP) by a total of $528 million in FY17. The average HRRP penalty was $205,000 per hospital for FY17, according to the Medicare Payment Advisory Commission’s (MedPAC’s) 2016 report to Congress.
What Works
Neither prior literature nor the new analysis provides clear answers about which practices most effectively reduce readmissions. For example, even though readmissions reduction programs provided an average net savings of $972 per heart failure patient, five of the 24 heart failure studies in the analysis had net losses.
“And they are not tiny losses, either,” Nuckols said. “Overall, things do look promising for heart failure, and many interventions are likely to result in savings, but there are going to be situations where you can’t be quite as sure of that.”
The research found that engaging patients and caregivers resulted in greater net savings. Such interventions had similar clinical results while providing $8,282 more in net savings per patient.
The effectiveness of patient engagement initiatives reflected the experience of Premier member hospitals, Biondolillo said. “That is a big part of the reason why patients end up back in the hospital, because their care has to be different. At the end of the day, it is those caregivers—whether family or friends or others in the community—who are essentially trying to manage a situation, which is more complex than it was prior to the admission.”
For example, Premier has focused on the importance of palliative care for those who have terminal illness by ensuring that caregivers are informed of patients’ wishes for their care and of what can be done at home.
Risk-Bearing Benefits
Nuckols said hospitals and health systems that had risk-bearing or capitated contracts or that belonged to accountable care organizations were more likely to see savings from readmission reduction initiatives. For example, a large portion of the benefits found from heart failure readmissions reduction efforts occurred long after the 30-day window of Medicare’s HRRP, on which hospitals tend to focus.
“The implications are more applicable to a large healthcare system,” Nuckols said.
Large systems and providers involved in capitated arrangements are more likely to share in savings from readmissions reduction than are organizations that operate under fee-for-service payment. Public and private payers are the primary recipients of savings when readmissions decline, the study authors noted. For example, Medicare is expected to save $8.2 billion from avoided readmissions under HRRP.
“This does not include the program costs associated with [quality improvement] interventions, however, because these are not borne by Medicare,” the authors wrote.
From 2010 to 2015, potentially preventable readmissions declined by 2.4 percentage points across all cases, after adjusting for changes in the patient mix, MedPAC reported. From 2010 to 2014, potentially preventable readmissions declined by 1.9 percentage points across all cases, after adjusting for changes in the patient mix, MedPAC noted in a 2016 report.
Data in the new study indicated that preventing one more readmission among 100 intervention enrollees with heart failure would yield $34,200 in net savings, on average. However, hospital readmissions only indirectly reflect patient health outcomes, the authors noted.
“Many readmissions are in the patients’ best interests and not avoidable,” the authors wrote. “To fully assess value, a cost-effectiveness analysis would need to be performed from the societal perspective, considering health-related quality of life and other implications for patients and caregivers.”
Bazzoli expects the federal government to continue to expand its readmission reduction initiatives “because they’ve already diffused into the private sector.” “From that perspective, I don’t see it ending; I just see it growing,” Bazzoli said.
This article originally appeared in HFMA’s Healthcare Business News .
Interviewed for this article:
Gloria Bazzoli, PhD, is Bon Secours Professor at the Department of Health Administration of Virginia Commonwealth University.
Teryl Nuckols, MD, MSHS, is director, Division of General Internal Medicine, Cedars-Sinai Department of Medicine.
Madeleine Biondolillo, MD, is vice president of engagement and delivery, Premier Inc.
