A Multi-Method Analysis of Hospital Readmissions and Medicare Penalties

Abstract

Hospital readmissions can worsen patient outcomes and contribute to substantial healthcare costs. Because many readmissions are considered preventable, reducing them has become a national priority in the United States, with Medicare penalizing hospitals whose readmission rates exceed benchmarks. This research examines factors associated with readmissions, identifies the types of hospitals most likely to receive penalties, and evaluates how hospitals respond to these penalties. The work is presented in three essays. The first essay provides a comprehensive literature review of factors associated with 30-day, 90-day, and 1-year stroke readmissions, along with a meta-analysis of U.S. studies on 30-day stroke readmissions. The findings show that readmissions increase with advanced age and a high comorbidity burden, and decrease with effective discharge planning, early follow-up with a primary care physician, and receipt of thrombolytic therapy. The second essay investigates hospital characteristics associated with Medicare readmission penalties, with a particular focus on affiliation with a healthcare system. Using Poisson regression, the analysis shows that hospitals affiliated with a healthcare system receive more penalties than non-affiliated hospitals, and that smaller hospitals are less likely to be penalized compared to larger hospitals. The third essay evaluates whether hospitals are more motivated to reduce readmissions by reputational pressure related to high readmission rates or by the financial losses associated with penalties. Using system dynamics modeling of Massachusetts hospitals, reputational pressure emerges as the stronger motivator. The analysis also identifies variation in sensitivity: specialty hospitals compared to community hospitals and hospitals with lower net incomes compared to those with higher net incomes are more sensitive to reducing readmissions, whereas urban hospitals are less sensitive than rural hospitals. Overall, this dissertation offers valuable insights into the factors driving hospital readmissions and identifies strategies to effectively reduce them.