A news media analysis of the economic and reputational penalties of the hospital readmissions reduction program

Abstract

Section 3025 of the Affordable Care Act (ACA) of 2010 established the Hospital Readmissions Reduction Program (HRRP), an initiative designed to penalize hospitals with excess 30-day readmissions. This study investigates whether readmission penalties under HRRP impose significant reputational effects on hospitals. Data extracted from 2012 to 2013 news stories suggest that the higher the actual penalty, the higher the perceived cost of the penalty, the more likely it is that hospitals will state they have no control over the low-income patients they serve or that they will describe themselves as safety net providers. The downside of being singled out as a low-quality hospital deserving a relatively high penalty seems to be larger than the upside of being singled out as a high-quality hospital facing a relatively low penalty. Although the financial burden of the penalties seems to be low, hospitals may be reacting to the fact that information about excess readmissions and readmission penalties is being released widely and is scrutinized by the news media and the general public.