The impact of profitability of hospital admissions on mortality.
BACKGROUND
Fiscal constraints faced by Medicare are leading to policies designed to reduce expenditures. Evidence of the effect of reduced reimbursement on the mortality of Medicare patients discharged from all major hospital service lines is limited.


METHODS
We modeled risk-adjusted 30-day mortality of patients discharged from 21 hospital service lines as a function of service line profitability, service line time trends, and hospital service line and year-fixed effects. We simulated the effect of alternative revenue-neutral reimbursement policies on mortality. Our sample included all Medicare discharges from PPS-eligible hospitals (1997, 2001, and 2005).


RESULTS
The results reveal a statistically significant inverse relationship between changes in profitability and mortality. A $0.19 average reduction in profit per $1.00 of costs led to a 0.010-0.020 percentage-point increase in mortality rates (p < .001). Mortality in newly unprofitable service lines is significantly more sensitive to reduced payment generosity than in service lines that remain profitable. Policy simulations that target service line inequities in payment generosity result in lower mortality rates, roughly 700-13,000 fewer deaths nationally.


CONCLUSIONS
The policy simulations raise questions about the trade-offs implicit in universal reductions in reimbursement. The effect of reduced payment generosity on mortality could be mitigated by targeting highly profitable services only for lower reimbursement.
Colorado School of Public Health, University of Colorado Anschutz Medical Campus, Aurora, CO 80045, USA. richard.lindrooth@ucdenver.edu
Richard C
RC
Lindrooth
R Tamara
RT
Konetzka
Amol S
AS
Navathe
Jingsan
J
Zhu
Wei
W
Chen
Kevin
K
Volpp
D004469:Economics, Hospital / Q000706:statistics & numerical data*; D017052:Hospital Mortality; D006801:Humans; D006278:Medicare / Q000191:economics* / Q000706:statistics & numerical data; D018803:Models, Economic; D010343:Patient Admission / Q000191:economics* / Q000706:statistics & numerical data; D010359:Patient Readmission / Q000191:economics; D011445:Prospective Payment System / Q000191:economics; D019984:Quality Indicators, Health Care / Q000191:economics; D012051:Reimbursement Mechanisms / Q000191:economics*; D014481:United States