The Hidden Financial Incentives Behind Your Shorter Hospital Stay

After one of her operations, my sister-in-law left the hospital so quickly that she couldn’t eat for days; after other stays, she wasn’t discharged until she felt physically and mentally prepared. Five days after his triple heart bypass surgery, my stepfather felt well enough to go home, but the hospital didn’t discharge him for several more days.

You undoubtedly have similar stories. Patients are often left wondering whether they have been discharged from the hospital too soon or too late. They also wonder what criteria doctors use to assess whether a patient is ready to leave.

It’s complicated and depends on more than clinical factors,” said Dr. Ashish Jha, a Harvard physician who sees patients at a Boston Veterans Affairs hospital. “Sometimes doctors overestimate how much support is available at home and discharge a patient too soon; sometimes we underestimate and discharge too late.”

Changing economic incentives — which are not always evident in individual cases — have also played a role in how long patients tend to stay. Recent changes to how hospitals are paid appear to be affecting which patients are admitted and how frequently they are readmitted.

What is clear is that hospital stays used to be a lot longer. In 1980, the average in the United States was 7.3 days. Today it’s closer to 4.5. The difference isn’t because hospitalized patients are becoming younger and healthier; by and large, today’s patients are older and sicker. Yet they’re being discharged earlier.

One big reason for the change came in the early 1980s. Medicare stopped paying hospitals whatever they claimed their costs were and phased in a payment system that paid them a predetermined rate tied to each patient’s diagnosis. This “prospective payment system,” as it is called, shifted the financial risk of patients’ hospitalization from Medicare to the hospital, encouraging the institutions to economize.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary