Readmission reduction lessons from the VA

Is the Veterans Health Administration a fiscal paragon when it comes to managing patients and avoiding readmissions?

Although the agency has been beleagured in the past year due to a scandal about secret wait lists to cover up the fact veterans wait months for appointments and tremendous cost overruns for its Denver hospital, it has an internal management system that the private hospital system could do well by duplicating, according to Quartz magazine.

Quartz cited the VA's Decision Support System, or DSS, as a prime differentiator from the private hospital sector. "Unlike most other hospital accounting systems, the VA DSS also can separate costs that are fixed regardless of the volume of services provided, such as administrative overhead, from costs that vary with service volume, such as lab tests or imaging. All of this means that the VA can track patients' costs with greater precision than most hospitals, and can more easily see the cost of readmissions," Quartz observed.

Citing a readmissions cost study derived from the DSS, the VA could expect to save $2,140 on average for every readmission that is prevented. For pneumonia, the savings averaged $2,278; $2,488 for heart failure; and $3,432 for a heart attack.

Quartz also noted that since the VA healthcare system operates on an annual budget, there is no financial incentive for the organization to readmit a patient. Furthermore, physicians are salaried VA employees and also have no financial incentives for readmissions or to provide unnecessary care.

Readmissions are a huge cost to hospitals. Data from the Agency for Healthcare Research and Quality concluded that hospitals spent a total of $41.3 billion between January and November 2011 on patients who had to be readmitted within 30 days of discharge. However, the drivers for readmission vary depending on the payer. And in many instances, hospitals still receive payments for readmitted patients, even though a large proportion of them are penalized by the Medicare program.

There are some ways for hospitals to calculate patients who are at high risk for readmission, such as those who undergo certain surgeries, but there is not a holistic system in place to prevent them on a large scale. 

To learn more:
- read the Quartz article

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