Hospitals lose money by preventing patient re-admissions

Preventing re-admissions, or so-called “bounce backs,” is one way for Medicare to cut costs.

Too bad there’s zero economic incentive for most hospitals to do so.

It’s obvious that keeping patients out of the hospital will save money in the long run. Many factors play a role in this, including, appropriate primary care follow-up. But, when hospitals diligently spend money to ensure good post-hospital care, they’re penalized for it.

Consider a Minnesota hospital cited in the article, which spent three-quarters of a million dollars on nurses and tracking equipment, and brought down their re-admission rate for congestive heart failure patients from 1 in 6, to nearly 1 in 25. [corrected, thanks for pointing that out]

Despite practicing better medicine, and saving Medicare $5 million, the hospital lost money on the program, and with fewer returning patients, generated less revenue.

With disincentives like these, it’s no wonder why many hospitals aren’t eager to cut down on re-admissions.

✓ Join 150,000+ subscribers
✓ Get KevinMD's most popular stories