We’ve already been addressing in many columns reforms to the Medicare payment system that have addressed “never events” and “readmissions”. We think the next target is likely to be “avoidable admissions”. The Healthcare Cost and Utilization Project (HCUP) has just released its report on the frequency and costs of potentially preventable hospitalizations for 2006. Basically, potentially avoidable hospitalizations are a group of ambulatory care-sensitive conditions that, at least in theory, could be managed appropriately on the outpatient side so that hospitalization could be avoided. Of course, not all such admissions are preventable. For example, the risk of hospitalization for community-acquired pneumonia can be reduced by both influenza and pneumococcal vaccination and good management of underlying chronic conditions. But even previously healthy patients can get pneumonia severe enough to require hospitalization.
The HCUP study identified over 4 million hospitalizations in the potentially preventable category in 2006, responsible for over $30 billion of healthcare expenses. So even if only some of these admissions were preventable there is still considerable potential savings. The HCUP study showed that the rates of preventable hospitalizations were considerably higher for Medicare patients than for those with private insurance. Also, patients from poorer communities were much more likely to have preventable hospitalizations than those from wealthier communities.
Hospitals have little control over many of these admissions, unless the patients receive their primary ambulatory care in that hospital’s system. So hospitals should not be penalized for these potentially avoidable admissions. That is in contradistinction to the argument about hospital readmissions, where hospital activities may play a big role. So where would CMS and other payors look to save the dollars from? The most obvious way to get incentives aligned for all parties will be to encourage true integrated healthcare delivery systems in the future that would receive global budgets or full capitation. That way the primary care delivery system will be incentivized to avoid these potentially preventable admissions. It is issues like these that mandate we restructure our healthcare payment system to help rationalize our healthcare delivery system across the entire continuum.
The Healthcare Cost and Utilization Project (HCUP).