Readmissions, Observation, and Improving Hospital Care

Because hospitals are expensive and often cause harm, there has been a big focus on reducing hospital use.  This focus has been the underpinning for numerous policy interventions, most notable of which is the Affordable Care Act’s Hospital Readmissions Reduction Program (HRRP), which penalizes hospitals for higher than expected readmission rates. The motivation behind HRRP is simple: the readmission rate, the proportion of discharged patients who return to the hospital within 30 days, had been more or less flat for years and reducing this rate would save money and potentially improve care. So it was big news when, as the HRRP penalties kicked in, government officials started reporting that the national readmission rate for Medicare patients was declining.