Win Whitcomb: Hospital Readmissions Penalties Start Now

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 wfwhit@comcast.net.