Financial Incentives May Help Reduce Hospital Readmissions

I wrote a few months ago about how many patients are readmitted to hospitals for costly visits that could be avoided. That posting described the results of a recent study that included suggestions to reduce readmissions, including better patient education and better scheduling of follow-up appointments.

A recent article in The Washington Post covers much of the same ground, but also talks about using financial incentives to address the problem.

Right now, hospitals -- such as Inova Mount Vernon -- that do a better job of preventing readmissions sometimes end up losing money because the health-care system doesn't pay for the extra work they do. Some health reform proposals would change the way hospitals are paid, so that stopping readmissions becomes good business.

One idea is to bundle the payments to hospitals, doctors and perhaps nursing homes or rehabilitation centers, to cover both the hospitalization and those first critical weeks after discharge.

Another proposal is to have Medicare penalize hospitals with high readmission rates for eight common chronic diseases. Members of both parties have been looking at ways of paying primary care doctors more to help patients manage their chronic diseases and avoid trips to the hospital every few weeks or months.

The key to reducing readmissions is to improve hospital processes. Financial incentives do not do that directly. But they can serve as a driver – a burning platform – to get hospitals to focus on what needs to be done.

Do you agree?