Hospitals Pay for Cutting Costly Readmissions

[nandagopal]

Millions of patients each year leave the hospital only to return within weeks or months for lack of proper follow-up care. One in five Medicare patients, for example, returns to the hospital within 30 days. Over all, readmissions cost the federal government an estimated $17 billion a year.

But even when hospitals find ways to greatly reduce the return trips, saving money for Medicare and other insurers, their efforts go unrewarded. In fact, because insurers typically pay hospitals to treat patients — not to keep them away by keeping them healthy — hospitals can actually lose money by providing better care. Empty beds mean lost revenue.

As Congress debates health care, some policy experts say no meaningful improvement can be made without changing the payment system so medical centers have more financial incentive to help people stay out of the hospital.

"The hospitals who say they are penalized for doing the right thing are absolutely right," said Dr. Robert Berenson, a policy specialist at the Urban Institute, an economic and social policy research center in Washington. "If we can't do this, we can't do much of anything in health reform."

Attuned to the issue, two Senate leaders of the effort to overhaul health care, Max Baucus, Democrat of Montana, and the Charles E. Grassley, Republican of Iowa, recently announced their support for changing the way hospitals are paid, to reward them — instead of punishing them — for reducing the number of patients requiring readmission.

Medical providers all too familiar with the financial double bind include Park Nicollet Health Services, a hospital and clinic system based in St. Louis Park, Minn. Park Nicollet started tackling the readmission problem four years ago, spending as much as $750,000 annually on more nurses and on sophisticated software to track heart failure patients after they left the hospital. It reduced readmissions for such patients to only 1 in 25, down from nearly 1 in 6.

But the reduction has been a losing proposition. Although the effort saved Medicare roughly $5 million a year, Park Nicollet is not paid to provide the follow-up care. Meanwhile, fewer returning hospital patients mean lower revenue for Park Nicollet.

"We've kept it up out of a sense of moral obligation to these patients, but we're getting killed," said David K. Wessner, chief executive of Park Nicollet. "We will totally run out of gas."

Another hospital system, Catholic Healthcare Partners in Cincinnati, has dropped a similarly successful follow-up program. The hospital said it did so because it could not afford the additional expense of keeping heart failure patients out of the hospital. Medicare officials argue that hospitals and doctors should already be doing what is best for patients. And they say some simple steps could be adopted at little expense, such as making sure patients get a list of the medications they should take after leaving the hospital. But Medicare, the Obama administration and some members of Congress now at work on health care legislation have acknowledged the need to change the payment system.

"Ultimately, we have a reimbursement system for health care that is not aligned all the time with providing high-quality care," said Dr. Barry M. Straube, the chief medical officer for Medicare. "Unequivocally, there has to be payment reform."

At Park Nicollet, the key to reducing readmissions is an early-warning system that signals when heart failure patients' symptoms are starting to worsen.

All the heart patients in the program weigh themselves daily at home and answer a few simple questions, like whether they are short of breath. They punch this information into their telephone keypads. If the data indicate a possible decline in a patient's condition, the software system alerts a nurse, who follows up with the patient.

Patients include Adeline Patyk, 85, and her husband, Chester, 83. If they begin to retain fluid, causing their weight to spike, or if they report that their ankles are beginning to swell, they can get help before their symptoms reach the point that they must go to the hospital. The nurse might suggest an adjustment to their medications, for example, or send them to a doctor.

"We don't have to go to the hospital so often," Mrs. Patyk said. "That means a lot."

Judy Ryan, a nurse who helps oversee the program, says that it works. "We can really abort that terrible experience of the emergency room, ultimately the I.C.U.," Ms. Ryan said.