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A Hospital Prevents Readmissions, but Threatens Revenue

Cheryl Clark, for HealthLeaders Media, February 10, 2011

An asthma prevention program at Children's Hospital Boston has drastically reduced emergency room visits and hospitalizations. But the program underscores the tension between a hospital's quest for quality and its bottom line.

The Community Asthma Initiative buys $150 vacuum cleaners and dust mite-proof bedding for the homes of its patients. And that speaks to what's right with the healthcare system.

But it also speaks to what's wrong with it.

Now five years into the program, 626 low-income asthmatic children who used to have expensive, frequent episodes of hospital care have been enrolled. In addition to the vacuums and bedding, families receive other non-toxic ways to reduce other pests, such as garbage cans with tight covers or copper gauze to fill in holes, all worth up to $300. They also get help with eliminating household clutter that traps dust. And an exterminator may be called in to deal with rodents.

Families also receive case management home visits, environmental assessments to detect household mold and moisture. In rare cases, city inspectors are nudged to pressure landlords to repair or seal areas with obvious mold or water leaks.

So far, the program is a quality success, reducing emergency room visits by 62%. Hospitalizations are down 82%. According to Children's, the average asthma hospital costs per child in CAI including all hospitalizations and ED visits are about $3,000.

And it costs about $2,600 per child, but avoids $3,900 in hospitalization costs over a two-year period, hospital officials say. Elizabeth Woods, MD, who directs the hospital's initiative, says cost analyses point to a 1.46 return on investment. The hospital has papers in press that illuminate its progress.

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1 comments on "A Hospital Prevents Readmissions, but Threatens Revenue"


Neal Colburn (2/10/2011 at 3:31 PM)
The opportunity to align quality outcomes with financial incentives was provided under global capitation. Having once been president of a community health center controlled HMO, I thought that it would obtain buy-in from hospitals in a collaborative program investing in quality practices and patient management, as noted in the article, improving quality; raising the health status of our patients; and thereby, reducing cost; then reivesting part of the savings in more cost-saving programs. I thought that hospital administrators would understand that improving the health of the community; reducing hospitalization while retaining the same capitated revenue would be attractive. Unfortunately, hospital CEOs and CFO would only consider fee for service payments for procedures, services and bed days, albeit with some small discounts for volume - the opposite of the hoped-for incentive direction. As a result, the opportunity to work collaboratively and align financial and quality incentives, and possibly programs was lost in most cases. This was repeated in market after market. The HMO was able to obtain buy-in from many of the primary care providers with quality process incentives and capitation. Many were able to significantly bend their cost curve, but with their small portion of the resources they were not able to substantially impact the total system cost. Now the federal government and other payers are betting on the ACO and Patient-Centered Medical Home models with less control over global resources but also less downside risk. Hopefully, the incentives will be well directed and appropriately valued to drive significant change. However, it will take more enlightened vision, collaboration and decision-making than appears to have been the experience in the past. Let's work together this time and make it work.