Reducing readmissions: Why mergers and acquisitions are not the answer

Mergers and acquisitions between healthcare organizations increased 51 percent from 2010 to 2013 — a trend that is expected to continue through 2015, according to a recent analysis by Kaufman Hall.

Hospitals and health systems are currently using M&As to strategically respond to economic pressures driven by the Patient Protection and Affordable Care Act, evolving reimbursement models and risk migration (from payers to providers), including penalties for readmissions.

Although M&As occur between all types of healthcare organizations, a new trend is emerging. During the first quarter of 2014, the value of M&A deals increased even though the actual number of transactions declined slightly. Many believe this is because health systems are not just buying other hospitals or physician practices but are also looking to acquire systems that include post-acute providers, such as long-term care and home health organizations. One possible reason for this is hospitals' desire to expand their view of the patient after discharge, allowing them to avoid readmissions by keeping a closer eye on patients once they leave the hospital.

M&As alone are not enough
Unfortunately, M&As alone are not an effective strategy for tackling readmissions, because they do not inherently address the clinical integration or care coordination issues that can lead to readmissions. On the contrary, transactions can actually impair a health system's ability to streamline cross-continuum care coordination due to differences in clinical practice, culture and other factors between facilities or systems.

For instance, imagine merging two multi-setting health systems that provide care across several states. Each facility — let alone each health system — has a different culture. They have different IT systems and communication methods. They also likely have varying ways of practicing medicine and treating specific diagnoses, which often vary by geographic region. Trying to merge and streamline these systems will be time-consuming at best and possibly not even feasible, depending on the cultural and process gaps that exist. So, at the end of the day, the health systems will spend considerable time and resources merging operations but may not be any closer to making a dent in readmissions.

Improving care coordination and clinical integration using technology
Rather than employing M&As as a targeted strategy for addressing readmissions, hospitals and health systems should instead focus on using technology to strengthen care coordination and clinical integration across the continuum. Enabling technology solutions can help providers focus the right interventions at the right time with the right patients. Following are a few specific ways technology can improve care and reduce readmissions.

  • Stratifying the patient's risk. Using technology to analyze factors such as diagnosis, comorbidities, level of family support, access to transportation, previous health history and compliance — as well as other issues such as financial means and health literacy — hospitals can identify and stratify patients' readmission risk as early as at the time of admission and apply interventions as needed to mitigate that risk before the patient is discharged. 


  • Matching the patient with the right provider. To better appreciate the available post-acute options, a hospital can use technology to review and assess data from the post-acute community, allowing the hospital to understand how post-acute providers are performing and make informed decisions about where to refer patients following discharge. 


  • Tracking risk in the post-acute setting. After the patient is discharged, organizations can employ risk stratification technology to continue assessing the patient's risk for readmission based on whether the patient meets predetermined milestones in the post-acute care plan. For example, if a patient is receiving home health care, biometric levels can be taken and transmitted back to the hospital or primary care physician to make sure the patient is meeting the desired care plan benchmarks. If the patient misses a milestone, technology can alert the hospital that the patient's risk level has changed so the organization can apply appropriate interventions before the patient needs to be readmitted. On the other hand, if the patient does meet defined benchmarks, his or her readmission risk will likely decline, reducing the need for human interventions by the hospital. 


  • Facilitating care coordination and discharge. Although not appropriate for every patient, care coordination and discharge technology can make the discharge process more efficient for both patients and hospitals. Additionally, it can free staff to apply direct interventions for patients who are at higher risk for readmission. For instance, if a 65-year-old patient is being discharged home following orthopedic surgery, has support from his wife and adult children, is expected to recover quickly, has no other comorbidities and has historically been compliant with treatment plans, there is little risk that this patient will be readmitted. As such, leveraging discharge technology in this scenario to streamline the process makes sense. On the other hand, if an elderly patient with heart failure has several comorbidities, no family support and no access to transportation, she is at high risk for readmission and will most likely need human interventions prior to and following discharge to ensure she follows her care plan. 


  • Improving communication and data sharing across the care team. Many obstacles impede data sharing across a patient's care team: disparate silos in healthcare that only occasionally communicate with one another, HIPAA regulations, plus connectivity and other IT compatibility issues, just to name a few. There are ways, however, to leverage today's technology and improve data sharing and communication between organizations. Some technology solutions, for example, allow hospitals to extract information from EHRs and pass it along to other hospitals, primary care physicians or post-acute providers through electronic faxes or web-based interfaces. These types of exchanges even allow HIPAA releases to be completed and sent electronically. 


  • Engaging the patient and family in the care plan. Patients and their families are critical members of the care team, and hospitals should keep them engaged during the patient's stay and following discharge to ensure the patient adheres to the care plan. Using technology, hospitals can deliver information to patients and their families related to the patient's condition, treatment, medications and post-acute care options during the patient's visit so the patient and family are aware of expectations well before discharge and have plenty of time to make important decisions.

Hospitals can also use technology to track patients' adherence to care plans, facilitate communication and deliver on-going education to the patient and family post-discharge, rather than overwhelming them with a deluge of information right before they leave the hospital.

Although M&As will yield certain benefits, organizations cannot effectively address readmissions through M&A activity alone. Instead, hospitals and post-acute care facilities should work together to leverage technology that facilitates information-sharing, communication and risk mitigation across the continuum. By doing so, organizations can effectively target readmissions without unnecessarily merging assets.

Mr. Sensor offers his visionary insights from the lens of a life-long career in health-care leadership as a hospital and health system CEO for nearly 25 years, and a senior adviser for Leavitt Partners. Wayne has a deep appreciation for the challenges hospital executives face in efficiently discharging patients from their hospitals as well as the significance of financial penalties imposed by Medicare for avoidable readmissions. He earned his MBA from St. Ambrose College and a bachelor’s degree in business management from the University of Northern Iowa. He is a published author and sought-after keynote speaker. Wayne currently serves on the Board of Directors for HealthEast Care System, the largest health care provider in the Twin Cities with 4 hospitals and 13 neighborhood clinics.

More articles on hospital readmissions:
5 ways hospitals can use EHRs to reduce readmissions  
Targeting health IT to reduce readmissions  
Which cities have highest hospital readmission rates? 

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