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  • November 19, 2018

Waiting for the windfall

New research found that financial considerations drive medical discharge decisions at long-term acute-care facilities.

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Health care providers have clinical guidelines to help them determine when a hospital patient should be discharged. Unfortunately, financial considerations may influence those decisions.

A paper in the November issue of the American Economic Review examines whether long-term acute-care hospitals strategically discharged Medicare patients when it was most lucrative to do so, which may not have been in the best interests of the patient.

Examining Medicare claims data between 2004 and 2013, authors Paul Eliason, Paul Grieco, Ryan McDevitt, and James Roberts found that a disproportionate number of patients were discharged immediately after they passed the so-called “magic day,” when Medicare paid out a large lump-sum to cover the rest of the patient’s care.

 

 

Figure 2 from Eliason et al. (2018)

 

The histogram above shows discharges for long-term acute-care patients relative to the magic day (indicated by the “0” on the x-axis). The pattern shows a dramatic spike immediately after the lump-sum payment.  The authors say that the hospitals discharged more than 25 percent of patients during the three days immediately after crossing the threshold, compared to 6.8 percent of patients during the three days immediately preceding it.

The pattern suggests that hospitals based their decisions on factors other than clinical guidelines, keeping some patients longer than necessary in order to capture the payment. The phenomenon occurs more often at for-profit facilities.