In order to examine the proportion of Medicare expenditures attributable to repeated admissions to the hospital, we assessed the frequency with which 270,266 randomly selected Medicare beneficiaries were readmitted after hospital discharge between 1974 and 1977. Twenty-two percent of Medicare hospitalizations were followed by a readmission within 60 days of discharge. Medicare spent over $2.5 billion per year (24 percent of Medicare inpatient expenditures) on such readmissions between 1974 and 1977. Analogous expenditures in 1984 could approach $8 billion. Even a small decrease in the readmission rate could result in substantial savings for the Medicare program. The recently enacted prospective-payment legislation, however, creates economic incentives that could increase readmission rates. Attempts by professional review organizations or others to develop hospital readmission profiles will need to control for patient and hospital characteristics that are correlated with the likelihood of readmission. Further study of such characteristics could help identify high-risk patient groups for whom increased outpatient supports might prove cost effective. (N Engl J Med 1984; 311:1349–53.).
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