Join faculty members and graduate students discussing Prof. Jonathan Helm’s paper, coming from Arizona State University Carey School of Business, “Stalled progress and the role of operations in the next phase of readmission reduction.”
Abstract
In 2010, the United States spent $15 billion on hospital inpatient readmissions, prompting Medicare to institute a new penalty mechanism to incentivize hospital to “get it right the first time”.
It is estimated that over 2,500 hospitals in the US will receive penalties totaling over $500 million this year alone. Despite these significant penalties, introduced in 2012, along with new payment schemes that incentivize readmission reduction, the national cost of Medicare readmission grew to $25 billion in 2013, and $27 billion in 2015.
While some progress has been made to slow Medicare readmissions, a recent JAMA article indicates that readmission reduction has stalled to less than 0.1% improvement from 2013 to 2016 as executives came to realize that the cost of current readmission reduction practices can outweigh the penalties themselves. This is despite the fact that numerous studies show that up to 75% of readmissions may be preventable.
In this talk, I argue that hospitals are attacking the right triggers for readmission, but are doing so in a cost-inefficient manner, leading many to abandon readmission reduction programs and simply accept the penalties, as hypothesized in recent OM literature.  
I will begin by describing a longitudinal model of the patient’s health condition that extends classical models of machine maintenance. This model is used as a building block for the optimal design of post-discharge monitoring schedules (phone calls and office visits), with a brief discussion of staffing. The methods employed involve stochastic modeling and analysis and non-linear optimization. I will present some managerial insights for discharge planners and discuss the efficacy of the method in a case study of a high readmission patient group. Then I will briefly present some preliminary results from a pilot study at a partner hospital that demonstrates an average 19% reduction in readmission rate. I conclude the talk by discussing future directions for readmission research and the role of inpatient interventions and an ongoing partnership with a hospital to implement these new methods.