Hospital readmissions, also known as "bouncebacks," are not only extremely costly, they are taken as a concrete metric of inadequate quality. According to an April 2, 2009, study in The New England Journal of Medicine, Medicare readmissions alone cost in excess of $17 billion per year.


In August 2012, the Centers for Medicare & Medicaid Services announced its final rules on bounceback penalties. Hospitals with excess readmission rates related to three specific conditions—heart failure, acute myocardial infarction and pneumonia—will lose a portion of their total Medicare reimbursement. Penalties for hospitals exceeding risk-adjusted readmission rates (based on 30-day averages for these conditions) began in the fourth quarter of 2012, at up to 1 percent of aggregate Medicare payments for all discharges. This penalty will grow up to 3 percent in 2015. The resulting costs could be quite high, particularly for an industry that survives on very narrow margins.

Given the gravity of the problem, hospitals will need to be compliant with CMS policies—especially as additional conditions are added to the program—and private insurers are certain to follow. But this new administrative rule is just the beginning of a larger trend. The bottom line is that hospitals will no longer be paid for services that are considered avoidable.

Bounceback penalties are the latest step taken by CMS to hold providers financially accountable for errors in medical care. These penalties increase the pressure on organizations to measure the problem accurately, create appropriate accountability and incentives, and develop better care transitions and coordination.

What's Driving Readmissions?

While there may be some debate on the causes of readmission (or even the degree to which they are controllable), widely varying bounceback rates for similar conditions suggest that at least some of these readmissions are avoidable. Care paths may vary, but evidence suggests that bouncebacks are due to more than just variations in acute care. What really drives unnecessary readmissions usually can be attributed to a process failure, often in discharge planning, education or coordination of care.

Hospital staff, for example, may provide inadequate medical- and care-related information to patients (due to a language barrier, education or just a lapse in the process). Inadequate information results in poor compliance with medication regimens or health maintenance. Additionally, because hospitals have been responsible for patients only through discharge, they have let post-acute care providers handle discharge management. Finally, hospital personnel often make insufficient use of community resources and may overestimate the capacity of family caregivers to help with post-acute care.

Finding Real Solutions

Rather than debating the merits of the CMS program, hospital leaders should focus on identifying, addressing and managing causes of readmission. Critically, they should determine what can be learned from those patients who bounce back and those who don't. Until then, they can fix nothing.

First, leaders must identify the conditions they want to target. Obviously, the starting point should be those conditions on which CMS has focused. Analyzing patients with these conditions who are readmitted will be essential to identifying causes. Consider the following tactics:

Eliminate variations in care. While standardized care paths are no "magic bullet," consistently following evidence-based best practices will certainly enhance the odds for optimal outcomes. Treating patients with a standard process for specific conditions will allow you to eliminate the treatment variable and optimize the care-to-cost ratio.

Assess risk at the time of admission and evaluate criteria for discharge. Discharge planning should begin at the time of admission. Patients should never be discharged until they have met a standard level of "wellness." Hospitals must understand risk factors for patient types (within disease groups) and the health status of a particular patient when he or she first arrives for care. Certain patients will require a different degree of stability before they even can be considered for discharge to post-acute care, let alone sent home. Criteria vary based on diagnosis and history—even time spent at the hospital. Regardless, there should be clear criteria for discharge as well as an audit trail to ensure that patients are released in accordance with these criteria.

Administer an effective discharge process. Once patients have met discharge criteria, hospital leaders must ensure that staff have planned adequately for discharge and have educated the patient. Some important actions to consider include:

  • delivery of patient education, including timing, content, language and take-away instructions;
  • discussions with patients and families regarding post-discharge support requirements; creation of a follow-up, transition or post-acute plan.

Determine if adequate post-discharge support is available, and if it has been coordinated with the hospital. Bounceback penalties are forcing acute care facilities to take ownership of follow-up care, because a failure in post-acute care often results in a readmission. Hospital staff need to determine the following factors:

  • appropriateness of service intensity by subsequent providers;
  • medication adherence information (follow-ups, refills, etc.);
  • post-acute facility discharge processes and coordination with the hospital;
  • level of support from the patient's family.

These four tactics can aid hospitals in understanding patient populations and developing the right accountabilities. Often, there are multiple dynamics at work, and hypotheses based on case samples need further validation. However, this kind of analysis is the only way to understand the causes of bouncebacks in a specific institution.

Once hospital leaders understand the causes of bouncebacks, they can focus their attention more accurately on reducing readmissions. This might mean exploring such nontraditional opportunities as building or partnering with medical homes or hospice/palliative care, or adding transition coaches. But a proper diagnosis is needed before treating the problem, and this will be specific to each institution.

What's Being Done

A number of hospitals and payers across the country have initiated innovative programs to reduce bouncebacks, many reflecting a focus on the issues previously outlined.

For example, a team at UC San Francisco Medical Center was able to reduce readmissions by nearly a third, according to a university press release, after studying and monitoring heart-failure patients to target preventable readmissions. Team members realized that many of the patients did not properly understand their discharge instructions. By changing the way they communicated with patients, they reduced 30- and 90-day readmissions for heart-failure patients 65 and older by 30 percent.

In another study published in the Archives of Internal Medicine last year, a nurse-led transitional care program involving home visits and phone support reduced adjusted 30-day readmission rates by 48 percent at Baylor Medical Center Garland, in Texas.

Taking a different approach, a Horizon Blue Cross Blue Shield of New Jersey pilot program is telemonitoring patients who have been treated for congestive heart failure once they have returned to their homes. Automated readings of weight gain prompts a phone call, enabling patients to take corrective action or to schedule an office visit instead of going to the emergency department, according to plan sponsors.

These examples show how properly investigating readmission causes can result in effective remediation. But the fact is that these solutions have yet to be widely adopted. Individual patient needs must be studied to isolate the bounceback problem, and health care systems need to take corrective action, holding employees accountable for creating better health outcomes.

A Change in Culture

To reduce bouncebacks, most health care delivery systems need to make a fundamental shift in their organization's culture. Doctors and nurses need to be accountable for educating their patients and providing the resources they need to transition smoothly to the next stage of their recovery. Health care systems need to develop processes for monitoring post-acute care and discharge to ensure that subsequent providers are providing the same standards required at acute care discharge.

Leaders should consider post-acute outreach efforts as well as technology to provide information on patient adherence and vital signs. Such investments can provide significant returns if they help eliminate the threat of bounceback penalties, and they are the right thing to do for patients.

To ensure buy-in, executive leaders must involve staff across the organization (doctors, nurses, physician assistants, social workers, etc.). As with any change effort, leaders must communicate carefully about the purpose and impact of a bounceback management initiative. A well-spoken directive will ensure commitment.

A System to Reduce Readmissions

Bounceback penalties are serious business. Without a systematic process for monitoring the problem, effective analytics to understand it and disciplined interventions for managing it, a hospital's finances are at risk. A solid plan includes documenting, collecting and understanding data on at-risk patient populations, and determining where opportunities for improvement exist.

By engaging health professionals in expanding the definition of care across the continuum, delivery organizations can create a system that allows for better outcomes at lower cost. And this is something that will resonate with employers, payers and patients in our current resource-constrained environment.

Michael Abrams, M.A., is managing partner of Numerof & Associates Inc. in St. Louis, and co-author (with Rita Numerof) of Healthcare at a Turning Point (CRC Press, 2012). Matt Levy, J.D., is a business analyst at Numerof & Associates.