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Preventing Hospital Readmissions Presents Financial Paradox

Rene Letourneau, for HealthLeaders Media, June 10, 2013

Despite valid financial concerns, hospital executives are expressing a growing desire to avoid readmissions for the sake of good patient care—because it's the right thing to do.

As Medicare turns up the heat on hospitals by imposing financial penalties for readmissions it considers preventable, provider organizations are caught in a catch-22.

By avoiding readmissions and the corresponding Medicare payment consequences, hospitals also drive down their patient volume, and, therefore, their revenue, which is still mainly based on a fee-for-service reimbursement model. Although healthcare is undoubtedly moving toward a value-based payment structure, it hasn't gotten there yet.

Despite this valid financial concern around preventing readmissions, the hospital executives I speak to often express a growing desire within their organizations to avoid readmissions for the sake of good patient care.

This attitude is also reflected in the HealthLeaders Media Industry Survey 2013, where 92% of respondents identified reduced reimbursements as the number one threat to their organizations, while citing patient satisfaction/experience and clinical quality as their top two priorities for the next three years, at 54% and 48% respectively. Healthcare leaders are clearly worried about finances, but are still focusing their attention on improving quality.

So I wasn't surprised to read a recent statement from the RARE (Reducing Avoidable Readmissions Effectively) Campaign—a coalition of healthcare stakeholders in Minnesota sponsored by the Minnesota Hospital Association, Stratis Health, and the Institute for Clinical Systems Improvement—reporting that participating hospitals succeeded in preventing 4,750 readmissions in the state between Jan. 1, 2011 and Dec. 31, 2012.

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