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Is the path to better outcomes paved in gold? Physician incentives and hospital readmissions

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African american female geriatrician discharging elderly patient from clinic. Senior woman forming hospital discharge papers. Sick old lady filling out files in hospital waiting room.

One in eleven Canadians admitted to hospital are readmitted within 30 days of discharge. Patients who are readmitted are three times more likely to die within a year and unplanned readmissions result in $2.3 billion additional health system costs per year.

Dr. John Staples, a general internal medicine physician and scientist at Advancing Health, says that this is a common problem around the world, and one that has been met with a variety of strategies with limited success.

“The question that often comes up as a clinician when one of your patients is readmitted is: ‘Did I do something wrong?’, ‘Could this have been prevented?’. That’s a very natural question, and one that researchers and policymakers have asked quite a bit over the last 10 or 15 years,” he said.

British Columbia, which has a higher rate of unplanned readmission than the national average, introduced a $75 fee-for-service payment in 2012 to incentivize physicians to complete a detailed discharge plan for their patients. The intention of this plan was to improve the transition to community care and reduce readmissions.

Physicians can claim the payment if they create a discharge care plan for patients that reviews and updates prescription medications, outlines planned follow-up, and indicates reasons why a patient should seek further medical care. The care plan has to be shared with the patient and their primary care provider within 24 hours of discharge.

“When I moved back to B.C. and started to practice, I became aware of this incentive payment,” said Dr. Staples. “I started to wonder: ‘Is it effective?’, ‘Is anybody looking into this?’. It didn’t appear that there was any kind of effort underway to see if it actually worked.”

And so, in collaboration with Dr. Jason Sutherland, Program Head for Health Services and Outcomes at Advancing Health, Dr. Staples set out to understand whether B.C.’s strategy was meeting its goals. The researchers published their findings in two papers.

Did B.C.’s incentive change outcomes or practice?

The first paper, published in 2021, looked at the monthly proportion of hospital discharges that had a subsequent unplanned readmission within 30 days. The researchers looked to see if the introduction of the incentive payment was associated with a reduction in this population-wide readmission risk.

Among the over 400,000 hospitalized patients during the study period, slightly more than 40,000 were readmitted, a 10 per cent readmission risk. There was no significant change in readmission risk or 30-day mortality with the introduction of the new fee policy.

“This simple analysis suggested that the incentive didn’t have the desired effect, but because of how it was rolled out, very few patients were actually exposed to the intervention at a population level,” explained Dr. Staples. “This meant we were not able to determine whether the intervention was ineffective, or whether it was effective but inadequately scaled.”

Dr. John Staples, Advancing Health Scientist and general internal medicine physician

In order to strengthen their conclusions, Drs. Staples and Sutherland published a second analysis in May of this year. The group looked at the five-year period after the discharge planning incentive was introduced and included everyone who was potentially eligible for the intervention, dividing them into those whose physician claimed the incentive payment and those whose physician did not. Again, Dr. Staples and the study team found that the incentive did not reduce the risk of readmission or death, and and it did not affect health care costs.

Beyond improving readmission risk, one of the expected impacts of detailed discharge planning is better prescribing patterns. In order to estimate whether the incentive was improving these practices, the researchers measured the proportion of patients with cardiovascular disease who received at least one prescription fill for a beta-blocker (considered a high-quality prescribing practice). Declining quality of care was assessed using the proportion of older adults with least one prescription fill for a potentially harmful medication in the elderly (an adverse prescribing practice). Introduction of the incentive did not change either of these measures, suggesting the incentive did not affect quality of care.

“Throughout the study period, just over 25 per cent of older patients received a potentially inappropriate medication and only 75 per cent of patients with cardiovascular disease were prescribed their necessary medications,” said Dr. Staples. “One of the main takeaways from our study is that there are many gaps that could be filled to improve care for British Columbians. However, physician incentives may not be the best way to achieve these goals.”

Can physician incentives make an impact?

Physician incentives have been tried in other provinces and countries with similar findings. A $25 payment to primary care physicians in Ontario was introduced to incentivize follow-up within 14 days of hospital discharge, but the payment has not increased early follow-up or reduced readmissions. In B.C., incentives have failed to change continuity of care, hospitalizations, or resource use in complex patients.

In the US, a program that uses Medicare reimbursement penalties on hospitals with high readmission rates reduced readmissions and saved money, but may have increased mortality in some patients, disproportionately affected safety-net hospitals, and encouraged dishonest practices by hospitals rather than improve patient outcomes. Although they are effective, these penalties remain somewhat controversial.

“Physician incentives are intuitively appealing because everybody can understand how if you offer a little bit more money, people’s behaviour might change,” said Dr. Staples. “However, our studies and previous research suggest that reducing readmission risk will likely require tactics beyond financial incentives for physicians.”

“This is a very hard problem. Many smart people, lots of research dollars, and many hundreds of millions of policy dollars have gone into trying to solve it, with pretty mixed results,” added Dr. Staples.

However, he says, doing away with an incentive because it doesn’t impact the set of expected metrics is not necessarily the best way forward. In the five-year study period, the incentive fee cost the province roughly $2.1 million, a tiny fraction of the nearly $30 billion spent on health care each year in BC.

“It takes significant time and effort to do good discharge planning. I suspect that even before this incentive was around, most physicians were putting in that work to make the discharge as safe as possible, but they weren’t being paid for it,” he noted. “There may be an argument to be made for aligning effort and remuneration in the form of this incentive.”

“There are lots of reasons why we may want to continue with an incentive, even if it doesn’t change the underlying problem that motivated the policy. However, we need to continuously study these incentives and be explicit about the considerations driving our policy choices,” he added.

Beyond the hospital: How to improve health system performance

Research shows that only about one-quarter of admission risk is due to medical care, overshadowed by factors like inadequate access to primary care, insufficient community supports, limited health literacy, and socioeconomic inequalities.

“The system we have is very hospital-focused and often has decision makers thinking about hospitalizations as an expensive and undesirable outcome,” said Dr. Staples.

However, readmissions might not be the best indicator of health system performance. A study in the US assessed a detailed, nurse-led intervention that aimed to improve discharge processes, including a discharge readiness assessment, patient follow-up, and communication with primary care providers. The intervention failed to improve readmission but decreased 30-day mortality by a staggering two-thirds.

“This underscores the degree to which strengthening our health care system may not actually influence a specific measure, but may influence more important measures of population health,” said Dr. Staples. “I think it’s important to pay attention to readmissions, but we have to broaden our lens and think about other important outcomes as well. The best measure of how we’re doing as a society is probably not so focused on hospitals.”


This research was supported by grants from the Specialist Services Committee (a collaboration between Doctors of BC and the BC Ministry of Health), the Vancouver Coastal Health Research Institute, and the University of British Columbia Division of General Internal Medicine Academic Investment Fund.

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