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For several years, reducing rehospitalizations of Medicare beneficiaries has been a key public policy goal, the intent of which is to improve quality of care for beneficiaries and reduce costs for the Medicare program.[1]  Studies have shown that rehospitalizations are common and expensive.  In 2006, for example, nearly one-quarter of nursing home residents (23.5%) were rehospitalized within 30 days, at a cost to the Medicare program of $4.34 billion.[2]  Yet, in many instances, nursing home residents' rehospitalizations are avoidable.[3]

However, reducing hospitalizations and rehospitalizations must be accomplished appropriately and with attention to the needs of residents.  This is especially true in the current national environment where much of the emphasis in health care is on cost-containment, with increased penalties for unnecessary hospitalizations and rehospitalizations.

  • Not all hospitalizations and rehospitalizations should be prevented. Some, given a patient's particular circumstances, may well be medically necessary and appropriate.[4]  Moreover, denying Medicare beneficiaries the hospital care they actually need can be dangerous.
  • It is important to avoid cost-shifting gimmicks.  Labeling patients in the hospital as outpatients receiving observation care[5], for example, so that their initial time in the hospital is not counted as inpatient hospitalization and any return to the hospital is therefore not technically a rehospitalization (or, vice-versa, so that the initial time in the hospital is inpatient, the return, outpatient) is simply a semantic trick.  It does not reduce patients' actual stays in acute care hospitals.  Rather, for many Medicare beneficiaries, this gimmick only serves to increase their potential liability for the costs of outpatient Part B services and put Medicare-covered skilled nursing facility coverage out of reach.

Unnecessary rehospitalizations are correctly reduced by assuring, first, that patients are not prematurely discharged from acute care hospitals and second, that settings where patients receive post-acute care (such as skilled nursing facilities, SNFs) properly provide necessary post-hospital care services. 

The Wrong Way to Reduce Rehospitalizations

Imposing artificial numbers of reductions in hospitalizations and rehospitalizations is, by itself, the wrong approach.  There are already too many instances in which nursing home residents who need to be hospitalized are not. As Drs. Joseph G. Ouslander and Robert A. Berenson wrote in The New England Journal of Medicine in September 2011, "not all hospitalizations for conditions that can theoretically be managed outside an acute care hospital are preventable" and "not all nursing homes have the capacity to safely evaluate and manage changes in the condition of the clinically complex nursing home population."[6]  They conclude, "Setting unrealistic expectations and providing incentives to poorly prepared nursing homes to manage such care rather than transferring residents to a hospital could have unintended negative effects on the quality of care and health outcomes."[7]

Unfortunately, legislation being promoted in Congress to save Medicare dollars would require the Secretary of the Department of Health and Human Services to establish a hospital readmission reduction target rate for skilled nursing facilities, using a baseline hospital readmission rate (as of October 1, 2011) and the goal of achieving aggregate Medicare savings of $2 billion for 2014 through 2021.  Simply requiring nursing facilities to reduce their rates of hospitalization and rehospitalization, but not requiring them simultaneously to take steps to assure that residents who remain in the facility receive the care they need, could harm patients.

The Right Way to Reduce Rehospitalizations

Rehospitalizations can be reduced if nursing facilities are appropriately staffed to meet the complex health care needs of their residents.  Many studies have demonstrated that improved staffing in nursing facilities (particularly, registered nurses, nurse practitioners, and physicians) can lead to the appropriate reduction of hospitalizations.[8]

The Centers for Medicare & Medicaid Services's (CMS's) Medicare-Medicaid Coordination Office, in collaboration with the Center for Medicare and Medicaid Innovation, is now establishing "a new initiative to help States improve the quality of care for people in nursing facilities by reducing preventable hospitalizations."[9]

CMS will competitively select independent organizations to partner with and implement evidence-based interventions at interested nursing facilities.  These interventions could include using nurse practitioners in nursing facilities, supporting transitions between hospitals and nursing facilities, and implementing best practices to prevent falls, pressure ulcers, urinary tract infections, or other events that lead to poor health outcomes and expensive hospitalizations.[10]

This initiative builds on studies demonstrating the importance of staffing at nursing facilities as a key way to reduce hospitalization.

CMS funded a pilot quality improvement project in three nursing facilities in Georgia from May 1 to October 31, 2007.  The pilot facilities reported an average reduction of hospitalizations of 50% over the six-month period.  The project's Expert Panel identified as key factors for "preventing avoidable hospitalizations…greater on-site availability of physician or nurse practitioner or physician assistants, more registered nurses providing care, availability of lab results within 3 hours, and the capability of the NH to administer intravenous fluids."[11]

The nursing home chain, Life Care Centers of America, reports that it reduced rehospitalizations from 40% to 15% in one year in its facilities that employed a full-time physician.[12]  Additional benefits of the employment of physicians in nursing facilities reported by the corporation were reduced use of antipsychotic drugs, "reduced staff turnover, greater resident and family satisfaction, and improved clinical outcomes."

As the Center for Medicare Advocacy wrote in anAlert from March 2011, earlier studies of hospitalization of nursing home residents found that hospitalization could be reduced if facilities employed geriatric nurse practitioners,[13] physicians, nurse practitioners, and physician assistants.[14]  The nursing home corporation Genesis HealthCare reported that it employed more registered nurses, nurse practitioners, and physicians in its nursing facilities, resulting in an 11% decline in unplanned hospitalizations since 2004.  Sixty percent of Genesis facilities have a "'transitional care unit,' in which an RN-intensive staff team cares for residents who have been in the hospital within the past 25 days."[15]  The RNs "are intravenous (IV)-certified."  The transitional care units also have a nurse practitioner or physician on staff every day.

Reducing rehospitalization by increasing staffing in nursing homes is not a new idea.  In an article published 23 years ago, reporting research conducted between 1985 and 1988, Professor Jeanne Kayser-Jones of the University of California, San Francisco, identified various factors that contributed to the hospitalization of nursing home residents.  Professor Kayser-Jones found that almost half the hospitalizations were unnecessary and that the residents could have been cared for in their nursing homes.  The predominant factor causing hospitalization was "the insufficient number of adequately trained nursing staff."[16]


Reducing hospitalizations and rehospitalizations is a worthy goal so long as policymakers first recognize that:

  • Many hospitalizations and rehospitalizations are medically necessary and appropriate,
  • Hospitalized patients should not be misclassified as observation status outpatients, and
  • Nursing homes must be appropriately staffed so that Medicare beneficiaries receive the care they need.

T. Edelman, March 1, 2012

[1] Misha Segal, "Dual Eligible Beneficiaries and Potentially Avoidable Hospitalizations," (CMS, Center for Strategic Planning, Policy Insight Brief) (Sep. 2011), [hereafter “Dual Eligible Beneficiaries and Potentially Avoidable Hospitalizations”].  A recent White Paper for the Long-Term Quality Alliance discusses three separate themes of research literature on this broad topic: hospitalization from the community, hospitalization from nursing homes, and hospital readmissions.  Katie Maslow, Joseph G. Ouslander, "Measurement of Potentially Preventable Hospitalizations" (White Paper prepared for the Long-Term Quality Alliance) (Feb. 2012), [hereafter “Measurement of Potentially Preventable Hospitalizations”]. 
[2] Vincent Mor, Orna Intrator, Zhanlian Feng, David C. Grabowski, "The Revolving Door Of Rehospitalization From Skilled Nursing Facilities," Health Affairs 29, No. 1 (2010): 57-64.
[3] Stephen F. Jencks, Mark V Williams, Eric A. Coleman, "Rehospitalizations among Patients in the Medicare Fee-for-Service Program," New EnglandJournal of Medicine 360;14 (April 2, 2009),
[4] Joseph G. Ouslander, Robert Berenson, "Reducing Unnecessary Hospitalizations of Nursing Home Residents," New England Journal of Medicine 2011; 365: 1165-1167 (Sep. 29, 2011), [hereafter “Reducing Unnecessary Hospitalizations of Nursing Home Residents”]; "Measurement of Potentially Preventable Hospitalizations," supra note 1. 
[5] Patients in observation status are placed in hospital beds and receive medical and nursing care, diagnostic tests, treatments, prescription drugs, and food.  But because they are in observation status, they are labeled outpatients.  For more information about observation status, see Center for Medicare Advocacy, "Observation Status,"  See also Kenneth R. Dardick, MD, Judith Stein, JD, "Hospital Readmission and Measures of Quality" Journal of American Medical Association, Vol. 301, No. 4 (January 25, 2012)
[6] "Reducing Unnecessary Hospitalizations of Nursing Home Residents," supra note 4.  See also "Measurement of Potentially Preventable Hospitalizations," supra note 1.
[7]  Id
[8]  See Center for Medicare Advocacy, "More Nurses in Nursing Homes Would Mean Fewer Patients Headed to Hospitals" (Weekly Alert, March 10, 2011),
[9]  "Dual Eligible Beneficiaries and Potentially Avoidable Hospitalizations," supra note 1.

[10] CMS, "Obama Administration Offers States New Ways to Improve Care, Lower Costs for Medicaid; Initiatives Focus on People Receiving Medicare and Medicaid Benefits" (Press Release, July 8, 2011),
[11] Joseph G. Ouslander, Mary Perloe, JoVonn H. Givens, Linda Kluge, Tracy Rutland, and Gerri Lamb, "Reducing Potentially Avoidable Hospitalizations of Nursing Home Residents: Results of a Pilot Quality Improvement Project," Journal of the American Medical Directors Association, DOI:10.1016/j.jamda.2009.07.001 (2009).  Abstract available at
[12] Kathleen Lourde, "Physicians Moving In; Life Care Centers of America hires full-time, facility-based physicians to reduce rehospitalizations," Provider (Feb. 2012),
[13] William H. Barker, James G. Zimmer, W. Jackson Hall, Brian C. Ruff, Charlene B. Freundlich, and Gerald M. Eggert, "Rates, Patterns, Causes, and Costs of Hospitalization of Nursing Home Residents: A Population-Based Study," American Journal of Public Health, 1994; 84:1615-1620.
[14] Joseph G. Ouslander, Gerri Lamb, Mary Perloe, JoVonn H. Givens, Linda Kluge, Tracy Rutland, Adam Atherly, and Debra Saliba, "Potentially Avoidable Hospitalizations of Nursing Home Residents: Frequency, Causes, and Costs," Journal of the American Geriatrics Society 58:627-635, 2010. 
[15] Kathleen Lourde, "Providers Tackle Preventable Hospitalizations: Nursing facilities ramp up efforts to care for higher acuity residents," Provider (Jan. 2011),
[16] J.S. Kayser-Jones, Carolyn L. Wiener, Joseph C. Barbaccia, "Factors Contributing to the Hospitalization of Nursing Home Residents," The Gerontologist 502 (1989).


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