Value Based Care Hurting Most Vulnerable Hospitals

In an article by the Washington Examiner, they highlight an interesting impact of the shift to value based reimbursement on hospitals:

Safety-net hospitals are getting hit by Obamacare’s push to penalize poor quality, the latest evidence of problems with the law’s effort to improve quality of care.

A new study from Harvard Medical School found that safety-net hospitals that treat many low-income or uninsured individuals are being penalized more for hospital readmission rates than other hospitals.

If a hospital readmits too many patients 30 days after they are discharged after being treated for a certain condition, that hospital gets penalized. A hospital could receive up to a 3 percent reduction in its Medicare annual patient payments.

The policy, which started in 2011, a year after Obamacare was passed, is intended to address a quality issue at hospitals. It is part of a larger shift in Obamacare to transition Medicare payments away from traditional fees for service toward a new model that rewards quality care.

We saw something similar to this happen during meaningful use as well. The most vulnerable hospitals couldn’t get the EHR incentive money because the incentive money wasn’t enough to cover the entire costs of the EHR. So, they just went without. In fact, an argument could be made that a large portion of the meaningful use EHR incentive money was paid to hospitals that were already on the path to EHR, but that’s a topic for another day.

When it comes to value based reimbursement it takes the right investment in technology and processes to be successful. I know a lot of hospitals that are just trying to keep their doors open. Where does that leave them time to think about these new complex government regulations? No doubt this shift to value based reimbursement is going to cause a lot of them to close their doors or be merged into the larger hospital systems. In fact, the later has been happening for a while and will continue to accelerate.

The article above does suggest a possible solution:

One alternative would have a hospital be measured by how its readmission rate improves rather than whether it meets a national average.

“Hospitals could be rewarded based on improvements off what their prior performance has been,” Barnett said.

Another alternative is for a hospital to become an accountable care organization. The concept gives a hospital a spending growth target that it has to meet for its Medicare patients.

I like the idea of benchmarking, but that can get really messy really quickly. The more I learn about value based reimbursement the more I worry that we’re just making things more complex without actually solving healthcare’s core problems.

About the author

John Lynn

John Lynn

John Lynn is the Founder of, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference,, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.