The Readmission Difference: Examining the Negative Impact of Hospital Readmissions on Financial Performance
Harry D. Holt

This study assesses the impact of hospital readmissions on the financial performance of hospitals. Understanding the determinants of hospital performance is one of the most important issues for managers of hospitals and policy makers. The study assesses the impact of readmissions due to infections and complications on financial performance. Financial and hospital readmission variables are captured with data from the Pennsylvania Health Care Cost Containment Council for years 2003 through 2009. Market and organizational variables are from the American Hospital Association Annual Survey Database. Hospital casemix data is from Center for Medicare and Medicaid Services. This study combines exploratory factor analysis and multiple regression with random effects and clustering. A risk adjusted composite score of hospital readmissions in a multiple regression model is used as the independent variable. Hospital readmissions were found to have a negative impact on operating margin in both the random effects model (β = -0.788, p < 0.01) and in the fixed effects model (β = -0.576, p < 0.10). The results of this study suggest unplanned readmissions from complications and infection have a strong negative impact on the financial performance of hospitals. Implications for management and policy are outlined.

Full Text: PDF     DOI: 10.15640/ijhs.v5n3a5