Let’s say the hospital works hard to decrease pneumonia readmissions from 25% to 20% and avoids the penalty. As outlined in Table 1, the hospital will lose $100,000 in revenue (admittedly, reducing readmissions to 20% from 25% represents a big jump, but this is for illustration purposes—we haven’t added in lost revenue from reduced readmissions for other conditions). What’s the final cost of avoiding the $100,000 readmission penalty? Lost revenue of $100,000 plus the cost of implementing the readmission reduction program of $170,000=$270,000.
Why Are We Doing This?
I see the value in care transitions and readmissions-reduction programs, such as Project BOOST, first and foremost as a way to improve patient safety; as such, if implemented effectively, they are likely worth the investment. Second, their value lies in the preparation all hospitals and health systems should be undergoing to remain market-competitive and solvent under global payment systems. Because the penalties in the HRRP might come with lost revenues and the costs of program implementation, be clear about your team’s motivation for reducing readmissions. Your CFO will see to it if I don’t.
Dr. Whitcomb is medical director of healthcare quality at Baystate Medical Center in Springfield, Mass. He is a co-founder and past president of SHM. Email him at [email protected].
The View From
SHM is an advocate for the move toward more global payment systems, as well as payment methodologies that reward good outcomes and processes over volume. System improvements require leadership and front-line physicians who are able to implement and evaluate new care-delivery models. SHM offers resources and tools to support the HM community in this era of change through leadership training (www.hospitalmedicine.com/leadership), professional development and mentoring in QI programs (www.hospitalmedicine.org/QI), and other practical tools, such as the value-based purchasing toolkit (www.hospitalmedicine.org/HVBP).
Additionally, the Project BOOST toolkit (www.hospitalmedicine.org/BOOST) includes a return-on-investment calculator to use in your institution’s efforts in reducing readmissions. The calculator is built both for fee-for-service and accountable-care-organization payment models, and it can serve as an adjunct to estimates provided to your hospital of penalties for excess readmissions under HRRP.
