A new study in the US journal Health Affairs looks at the impact in US hospitals of financial penalties imposed under Obamacare to force hospitals to reduce excess levels of readmission for patients who had certain medical and surgical treatment. The NHS has also attempted to use financial penalties as a way to deter readmissions.

The authors begin by stressing that “Hospital readmissions are common, costly, and – as they are often preventable – a marker for poor hospital quality.”

The penalties announced in 2010 and imposed for certain medical treatments from 2012, and soon afterwards extended to some surgical patients, were large:

“The penalties were substantial in size: up to 3 percent of Medicare’s base diagnosis-related group payments for each diagnosis in question, which is a ten- to fifteenfold larger incentive than pay-for-performance initiatives to reduce mortality.

“A recent survey confirmed the profound influence of the HRRP’s penalties: Following the implementation of the policy, 66 percent of hospital leaders reported that the program had a “great impact” on readmission reduction efforts, and nearly half reported that readmissions were their top priority.”

The survey, which covered a total of almost 2.5 million patients found that the penalties came at a time when readmission rates were already falling, and accelerated them not only for the medical specialties, but also had an impact on readmission of patients after knee and hip replacements.

So when the additional penalties to reduce readmission of surgical patients came in it had little or no effect.

In fact the authors suggest “Our findings also suggest that readmission reductions may be approaching a “floor,” and that a certain level of readmission “may be necessary and a sign of appropriate care for surgical patients.”

The authors go further, noting evidence that penalties for readmission “may have actually increased mortality for certain conditions, as some patients who should have been readmitted were instead discharged from the emergency department and died at home.”

There are also equality issues arising from the penalties:

“For instance, it is widely accepted that hospitals that received penalties tend to serve more minority and low-income patients and that their readmissions may reflect a failure of the social safety net rather than of their medical care. Safety-net hospitals bear the brunt of readmission penalties, and disparities may be widening at these facilities as they struggle to execute their mission in the face of sizeable penalties.”

The report tacitly admits that a factor in reducing readmission is properly coordinated discharge and support outside hospital – a factor which is of course a recurrent issue for the NHS.

In fact the penalties may have played a relatively minor role: the paper argues that provision of such joined up services by accountable care organisations “could have contributed to the observed decrease in readmissions.”

Nevertheless, the authors are reluctant to recommend any relaxation of the penalties in the US. They believe repealing the program “would remove the strong financial incentive to coordinate care at discharge and could bring readmissions back to pre-policy levels.”

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