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A Hospital Prevents Readmissions, but Threatens Revenue



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.



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.