Mississippi Delta hospitals see operating margins shrink under hospital readmission, value-based purchasing programs

Hospitals located outside of the Mississippi Delta, one of the most impoverished regions in the U.S., have more financial success under the Hospital Readmissions Reduction and the Hospital Value-based Purchasing programs than those inside the Delta, according to a study published in Medical Care.

Established in 2013, HRRP penalizes hospitals with higher-than-average 30-day readmission rates for a specific condition. Under HVBP, also implemented in 2013, hospitals are penalized or rewarded based on performance across clinical care, patient experience, outcomes and efficiency.

For the study, researchers — led by Hsueh-Fen Chen, PhD — used several public measures to create a seven-year panel dataset spanning from 2008 to 2014. Within the set, studying authors defined three periods: "preperiod" from 2008 to 2010, when hospitals did not know HRRP and HVBP rules; "postperiod 1" from 2011 to 2012, after CMS finalized HRRP and HVBP rules but before financial incentives took effect; and "postperiod 2" from 2013 to 2014, when hospitals began facing penalties or rewards under the programs. The study analyzed how hospitals qualifying for HRRP and HVBP performed financially during the periods.

Researchers found Delta hospitals — located across 252 counties in Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri and Tennessee — saw more Medicare and Medicaid patients than non-Delta hospitals. At the same time, Delta hospitals saw operating margins drop 0.9 percent and 4.2 percent in postperiods 1 and 2, respectively.

Comparatively, hospitals outside the Delta region saw operating margins increase 1.13 percent and 1 percent during postperiods 1 and 2, respectively.

"The growing gap in financial performance between the two hospital groups is likely a result of both the amount of penalties incurred from HRRP and HVBP and the expenditure from increased investments in infrastructure for reducing readmissions and improving quality of care and the patient experience," the researchers wrote.

"Policy makers should modify these two programs to ensure that resources are not moved from the communities that need them most," they added.

For the full report, click here.

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