Medicare readmission penalties--how will hospitals adapt?

Hospital readmissions incurring Medicare reimbursement penaltyCome next week, 40% of US hospitals will incur $280 Million in reimbursement penalties—all the result of over 2 Million Medicare beneficiaries each year being readmitted within 30 days of discharge.    The hope is that hospitals will reduce this rate to a manageable level, both by improving quality of care during the health episode and providing better post-care assistance.

Hospital executives are now scrambling to come up with strategies to reduce readmissions, which begs 2 questions:

  1. How much will hospitals invest in post-discharge health management solutions like home health, remote monitoring, and telemedicine?  It’s noteworthy that hospitals like Barnes-Jewish Hospital in St. Louis, which is facing the maximum Medicare penalty of 1%, recently established a team of nurses and social workers to monitor patients for 60 days post-discharge. 

  2. How will hospitals attempt to structure the business models for post-discharge health management? Staffing post-discharge teams will require significant upfront investment, so it will be interesting to see if hospitals partner with/outsource to service providers such as home health agencies and assisted living facilities to share the cost burden as well as the upside of reimbursement. 

These economic drivers will factor in greatly into the future of senior care monitoring, and it will be interesting to see how the Medicare penalty ultimately disrupts this market.