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Measuring the Hospital Length of Stay/Readmission Cost Trade‐Off Under a Bundled Payment Mechanism

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  • Kathleen Carey

Abstract

If patients are discharged from the hospital prematurely, many may need to return within a short period of time. This paper investigates the relationship between length of stay and readmission within 30 days of discharge from an acute care hospitalization. It applies a two‐part model to data on Medicare patients treated for heart attack in New York state hospitals during 2008 to obtain the expected cost of readmission associated with length of stay. The expected cost of a readmission is compared with the marginal cost of an additional day in the initial stay to examine the cost trade‐off between an extra day of care and the expected cost of readmission. The cost of an additional day of stay was offset by expected cost savings from an avoided readmission in the range of 15% to 65%. Results have implications for payment reform based on bundled payment reimbursement mechanisms. Copyright © 2014 John Wiley & Sons, Ltd.

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  • Kathleen Carey, 2015. "Measuring the Hospital Length of Stay/Readmission Cost Trade‐Off Under a Bundled Payment Mechanism," Health Economics, John Wiley & Sons, Ltd., vol. 24(7), pages 790-802, July.
    • Handle: RePEc:wly:hlthec:v:24:y:2015:i:7:p:790-802
    DOI: 10.1002/hec.3061
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    References listed on IDEAS

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    Cited by:

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    3. Caruso, Enza & Rossi Zadra, Andrea, 2020. "The trade-off between costs and outcome after cardiac surgery. Evidence from an Italian administrative registry," Health Policy, Elsevier, vol. 124(12), pages 1345-1353.
    4. Yuxi Wang & Simone Ghislandi & Aleksandra Torbica, 2020. "Investigating the geographic disparity in quality of care: the case of hospital readmission after acute myocardial infarction in Italy," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(8), pages 1149-1168, November.
    5. Damien Échevin & Bernard Fortin & Aristide Houndetoungan, 2023. "Healthcare Quality by Specialists under a Mixed Compensation System: an Empirical Analysis," CIRANO Working Papers 2023s-19, CIRANO.
    6. Ann P. Bartel & Carri W. Chan & Song-Hee Kim, 2020. "Should Hospitals Keep Their Patients Longer? The Role of Inpatient Care in Reducing Postdischarge Mortality," Management Science, INFORMS, vol. 66(6), pages 2326-2346, June.
    7. Ambugo, Eliva Atieno & Hagen, Terje P., 2019. "Effects of introducing a fee for inpatient overstays on the rate of death and readmissions across municipalities in Norway," Social Science & Medicine, Elsevier, vol. 230(C), pages 309-317.
    8. Walsh, Brendan & Wren, Maev-Ann & Smith, Samantha & Lyons, Seán & Eighan, James & Morgenroth, Edgar, 2019. "An analysis of the effects on Irish hospital care of the supply of care inside and outside the hospital," Research Series, Economic and Social Research Institute (ESRI), number RS91, June.

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