For hospital C’s—C-suite executives, that is—catching some Z’s might seem like an exercise in futility. And understandably so; after all, the growing pressure to simultaneously control costs and improve care quality is enough to turn even the heaviest sleeper into an insomniac. If you work or practice in a hospital setting, you’ve probably noticed—or even been the one to implement—some reform-driven changes to your facility’s operational processes. But, what’s really driving those changes—and is there a better solution? To find out, let’s take a closer look at three major burdens weighing on the minds of today’s hospital leaders:

1. Unplanned Hospital Readmissions

With an annual price tag of $26 billion for Medicare beneficiaries alone, readmissions represent one of the costliest problems in the US healthcare system—not only in terms of dollars and cents, but also with respect to the overall quality and value of the care patients receive. However, readmissions also represent one of the most preventable setbacks in the path to optimal (read: coordinated) patient care. So, it’s no surprise that recent reform initiatives—including the ACA’s Hospital Readmissions Reduction Program (HRRP)—have zeroed in on keeping readmissions to a minimum by holding hospitals financially accountable for their readmission rates. Specifically, the HRRP:

  • Reduces Medicare payments for all patients if a hospital has a higher-than-expected 30-day readmission rate for patients with specific clinical conditions.
  • Includes readmission measures for heart attack, heart failure, pneumonia, chronic obstructive pulmonary disease (COPD), and total hip and knee replacements.
  • Assigns penalties based on a hospital’s deviation from national averages for each type of care episode.

According to this Kaiser Health News article, hospitals paid a total of $420 million in readmission penalties between 2011 and 2014—and based on the trend toward value-based payment, it’s safe to say the regulatory stakes will only continue to get higher with time. Readmissions also factor into other value-driven payment models and regulations, including the recently adopted Comprehensive Care for Joint Replacement (CCJR) model, which is expected to save the US healthcare system $153 million. And if you’re a hospital CEO or other healthcare executive—and your facility is on the losing side of either of those totals—then I’m betting you’re tossing and turning your way through at least a few sleepless nights (whether or not you live in Seattle).  

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2. Post-Discharge Patient Safety

“Patient-centered care” is becoming somewhat of a buzz-term in the healthcare space. That’s because one of the overarching goals of healthcare reform is to create a collaborative environment in which providers work together to ensure each individual patient receives the right care, from the right provider, at the right time. The result? Providers—especially large providers like hospitals—increasingly are on the hook for what happens to their patients further down the care continuum. And one of the biggest barriers to patient success following hospital discharge? Patient safety—or a lack thereof, to be more precise.

But, how can a hospital possibly control what happens to a patient post-discharge? The easy answer to that question: Hold off on releasing patients who have not yet demonstrated the level of function necessary for success in a home environment. That’s easier said than done, though, as Medicare (the primary insurance for many people over the age of 65) not only represents a substantial portion of most hospitals’ total revenue, but also reimburses hospitals on a case basis—meaning the hospital receives a predetermined dollar amount for an entire inpatient episode of care, regardless of the length of stay.

The result: The longer the hospital waits to discharge a patient, the more money it loses. But, if a patient—especially a patient who is part of the readmission-vulnerable Medicare population—leaves the hospital too soon, there’s a chance the hospital will incur a readmission-related fine (see number 1 above). Talk about a catch-22 that’d stop any healthcare leader from catching even 40 winks.  

3. Alternative Payment Model Uncertainty

As noted in this article, the US Department of Health and Human Services (HHS) has a goal of tying 50% of Medicare fee-for-service payments to alternative payment models by 2018. One such model that’s gaining popularity across the healthcare space—especially in hospital systems—is the accountable care organization (ACO).

Essentially, an ACO is a group of doctors, hospitals, and other healthcare providers charged with coordinating their efforts to ensure the delivery of high-quality, high-value care. Like other reform-driven alternative models of payment and care delivery, ACOs encourage collaboration among all members of a patient’s care team, thus promoting the elimination of unnecessary or duplicate services. How? By supplementing traditional fee-for-service payment with incentives—both positive and negative—for efficiency and quality. For ACO participants, that means doing everything possible to keep patients from being admitted or readmitted to the hospital.

From a purely financial standpoint, though, ACOs present a unique conundrum for hospitals, which must balance the incentives received for keeping patients out of the hospital with the revenue generated from admitting patients to the hospital. And for hospital executives, that problem isn’t likely to drift away anytime soon—no matter how many sheep they count.


One thing is for certain: to find a solution to these problems, healthcare leaders must look beyond the status quo. Luckily, we here at WebPT are all about disruption—so, stay tuned to the WebPT Blog in the days and weeks to come, as we’ll present a decidedly out-of-the-box proposal for not only overcoming these challenges, but also capitalizing on them.