Readmission of High-Risk Patients Doubles Costs

Hospitals within the Veterans Administration could save an estimated $2,140 per patient by taking steps to ensure that high-risk patients who have been discharged will not need to be readmitted within 30 days, a study by Boston University School of Public Health (SPH) researchers shows.

The study, published in January 2015 in Health Care Management Science, examined expected readmission costs for patients with heart failure, heart attacks, and pneumonia—costs that have come under intense scrutiny as federal officials have sought to reduce Medicare payouts in recent years. Hospitals are penalized by Medicare for excessive readmissions, but little research has been done on the direct costs incurred by hospitals for readmitting patients.

Researchers Kathleen Carey, SPH professor of health policy and management, and Theodore Stefos, SPH assistant professor of health policy and management, found that, overall, hospitals could expect to save $2,140 for the average 30-day readmission avoided. For heart attack, heart failure, and pneumonia patients, expected readmission-cost estimates were $3,432, $2,488, and $2,278, respectively. For high-risk patients, including those with severe illnesses and complications, those expected costs more than doubled.

“We found the singular factor that had high impact on readmission cost was high risk of illness. This is an important finding for managers,” the study says. “Even though risk is a factor over which providers have no control, these patients may be good candidates for targeted intervention, since they can be expected to add significantly to the readmission-cost burden after controlling for other factors.”

The authors said the Veterans Health Administration, which oversees the network of VA hospitals, was a good setting for examining readmission costs. The network is federally funded, and readmissions do not result in any additional allocations to a particular hospital. Physicians are salaried VA employees, meaning they do not stand to gain, or lose, when they admit or readmit patients.

Trends at the VA have “implications for private sector hospitals that treat a high proportion of chronically ill and/or low-income patients, or that are contemplating adopting bundled payment mechanisms,” the study says.

Overall, about 13.7 percent of VA hospitalizations in 2011 resulted in readmissions to acute care within 30 days, the study found. For heart attack patients, that figure rose to about 21 percent.

Length of stay in the initial admission was not a significant factor. “We found no evidence that VA efforts at improved hospital flow and shorter inpatient stays had the unintended consequence of more readmissions,” the study says.

The authors recommended “improving the management of high-cost patients, especially those with chronic conditions,” in part by improving communication with patients and community providers at discharge. A previous Medicare study noted that half of the patients readmitted within 30 days had not received ambulatory care between discharge and readmission, suggesting that failure to provide close follow-up care on an outpatient basis may be a contributor to readmission rates.

Funding for the study came from the VA Office of Quality, Safety and Value.