As previously uninsured individuals look to sign up for an insurance plan for the first time through recently erected online health insurance exchanges, hospitals and other health care providers will undoubtedly be met with an influx of new patients. Along with these health insurance exchanges, the Affordable Care Act (ACA) instated the Hospital Readmissions Reduction Program (HRRP) as of October 1st 2012. Together, these two programs will put increased pressure on hospitals to provide better quality of care to a greater quantity of patients. How hospitals adjust to these new payment incentives and continue to strive to remain financially solvent in a time of decreased reimbursement rates and penalties for readmission will be of great importance in upcoming years.
The HRRP program reduces Medicare payments to hospitals with high levels of readmissions for certain expensive conditions — Acute Myocardial Infarction, Heart Failure, and Pneumonia. This program was put in place to shift from a focus on quantity to quality of care and increase overall health care efficiency. Before put into effect, 20% of Medicare patients were readmitted to hospitals within one month of discharge and readmissions were costing Medicare $17.5 billion. Two years out from its inception, the impact of this program is clear. In 2013, penalties to hospitals are expected to reduce Medicare payments by $280 million. While this is only a fraction (0.3%) of total Medicare spending, the penalties expose a disparity in the readmission rates amongst hospitals and bring forth possible interventions to reduce the amount of returning patients.
A study conducted at the University of Pennsylvania found that nurse staffing was linked to a decreased likelihood that a hospital was penalized under the HRRP. Coordination of care, personalized treatment — including preparation for life after discharge — and patient education are amongst some of the responsibilities of nurses. These functions undoubtedly affect the way patients manage their health and day-to-day life in the aftermath of their hospital visit and resultantly, can reduce the prevalence of readmission. Furthermore, hospitals with a large staff of nurses are able to check up and monitor patients with more regularity. Not surprisingly, the hospitals with higher nurse staffing had 25% lower odds of hospital readmission than the lower staffed hospitals. Enforcing a benchmark nurse to patient ratio may be an effective policy to promote better patient management.
While increasing the quantity of nurses in hospitals reduced HRRP penalties, a recent study from the Harvard School of Public Health found that readmission rates were also linked to the quality of surgical care. The study shifted the spotlight towards the procedural side of health care, away from hospital quality — reflected through nurse staffing. Currently, readmission penalties are being driven by medical conditions, such as pnemonia (above). The authors posit that readmission for medical conditions are influenced not by the quality of care, but by how sick the patient is — a factor heavily influenced by the underlying socioeconomic conditions of the hospital's patient population. They found that hospitals with the lowest surgical mortality had lower readmission rates than those with higher surgical mortality rates (13.3% and 14.4%, respectively). These findings indicate that Medicare should continue to strive to weight the penalties hospitals receive for readmissions according to their patient demographics and to include in readmission penalties for surgical care (in 2015 Coronary Artery Bypass Surgery — CABG will be added to the list of readmission conditions). Consequently, hospitals will need to strive to provide the best surgical care possible.
With the baby boomer population moving toward Medicare, hospitals will now more than ever need to find ways to work with the current system to reduce penalties and provide the best care for their patients. This means both better quality and management of care. With only 4-5% profit margins for most hospitals and one third of health systems being unprofitable, how hospitals finance these changes will be a significant challenge in upcoming years.