Reducing Readmissions Improves Hospital Financial Health
February, 18 2015 by Vickie Anenberg
The Hospital Readmissions Reduction Program (HRRP) went into effect in October 2012. At the time, many hospital CFOs misinterpreted its effect on the financial viability of their organizations. Their argument was the penalties imposed through HRRP and related costs would be more than offset by the revenue generated from the readmissions. This line of thinking was nothing more than false hope and has been disproved.
In a recent article, “The True Financial Impact of Hospital Readmissions,” written by Jim Hoffman and Mary Cronin of BESLER Consulting, the authors present a detailed analysis of why reducing readmissions has a positive effect on hospital finances.
The Affordable Care Act, of which HRRP is a part, triggered a radical shift in the financial paradigm. Hospitals went from fee-for-service to quality-driven, outcomes-based reimbursement. The penalties for noncompliance can be significant. CMS has estimated it will cost hospitals with high readmission rates for AMI, heart failure and pneumonia at approximately $428 million in FY15.
Hoffman and Cronin make a strong case for implementing programs to lower readmission rates. They back-up their position using CMS formulas and results showing how hospitals can improve their financial performance in a real world scenario.
Hospital administrators and CFOs alike can benefit by refreshing their knowledge and understanding of HRRP. CMS offers detailed information and multiple downloads of explanations and guidance on the agency’s website. The best place to start is here.
As healthcare providers face the challenges of Meaningful Use, Accountable Care, and ACA, the starting point is always the same. Quality staffing and staffing processes yield quality care – the cornerstone of financial viability.
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