In this New York Times article, "Hospitals Pay for Reducing Costly Readmissions," from May 8, 2009, Reed Abelson explores the paradox that hospitals with fewer readmissions lose revenue doing so:
But even when hospitals find ways to greatly reduce the return trips, saving money for Medicare and other insurers, their efforts go unrewarded. In fact, because insurers typically pay hospitals to treat patients — not to keep them away by keeping them healthy — hospitals can actually lose money by providing better care. Empty beds mean lost revenue.
The article continues on to say that the Senate is looking at ways to address this problem. Should hospitals receive payment that bundles payment for follow up care? What is the best way to realign payment and incentives for hospitals?