As reported on yesterday in Kaiser Health News, over 2,600 US hospitals – the most to date – will have their average Medicare reimbursement rates reduced over the period October 1, 2014 through September 30, 2015, due to the Hospital Readmissions Reduction Program. The overall reduction is projected to realize $428 million in savings to Medicare – i.e., translated as lost revenue to hospitals.
For anyone still unfamiliar with the reductions program, in a nutshell it is an attempt to use public policy to achieve more efficient alignment between patent care requirements and the overall cost of care provided – particularly to the extent costs are driven by care setting. Or, more pragmatically, Medicare does not want to pay the comparatively higher overhead costs associated with acute care settings if a patient’s readmission to that setting could have been avoided.
Of course, there’s the rub that will eventually have to be reconciled if the program is to remain: can we really objectively and often times arbitrarily determine what’s avoidable? The primary reason this is so difficult is because of the myriad environmental considerations that impact patient recovery and sustainable treatment away from the acute care setting. Where someone lives (housing), their neighborhood, their human support network, access to transportation, cognitive state and capacity for engagement, recognition of comorbid considerations such as anxiety and depression – the list goes on.
Hospitals and their clinical teams are taking the readmission program seriously. A three-percent reduction in revenue from your largest source when you are already struggling with narrow margins has that effect. New efforts to forge relationships with post-acute/long-term care providers, patient communication strategies, multi-provider think tanks, post-discharge follow-up programs, transitional care planning, utilization of telehealth and telemonitoring technology, targeted disease intervention – these primarily represent the extension, or repurposing, of core clinical capabilities.
Not to discount the importance of these initiatives, but by and large there is nothing all that innovative here when compared to the fundamental nature of the problem we are trying to solve. And there is a limited ability to address the fundamental challenge driving hospital readmissions: the environmental obstacles shared above. Worse yet, these tactical approaches fail to embrace the holistic reality that is patient treatment and recovery.
That’s where innovation efforts have to be focused: not on keeping someone out of the hospital but on removing the environmental obstacles that drive readmissions as a consequence of undesirable recovery and sustainability. As Toby Cosgrove, President and CEO of the Cleveland Clinic wrote earlier this week, “as my friend Professor Michael Porter of Harvard Business School says, innovation is the only solution to … long term issues faced by American healthcare.”
And it will ultimately be the only solution to lowering hospital readmissions.