64 Pages Posted: 16 Sep 2012 Last revised: 25 Feb 2013
Date Written: February 22, 2013
In the early years of the Twenty-First Century, it was widely speculated that massive, multi-purpose hospitals were becoming the 'dinosaurs' of health care, to be largely replaced by community-based clinics providing specialty services on an outpatient basis. Hospitals, however, have roared back to life, in part by reworking their business model.
There has been a wave of consolidations and acquisitions (including acquisitions of community-based clinics), with deals valued at $7.9 billion in 2011, the most in a decade, and the number of deals increasing another 18% in 2012. The costs of hospital care are enormous, with 31.5% ($851 billion) of the total health expenditures in the United States in 2011 devoted to these services. Hospitals are placing growing emphasis on increasing revenue and decreasing costs; engaging in pervasive marketing campaigns encouraging patients to view hospitals as an all-purpose care provider; geographically targeting the expansion of their services to 'capture' well-insured patients, while placing greater pressure on patients to pay for the services delivered; increasing their size, wealth, and clout, with two-thirds of hospitals undertaking renovations or additional construction and smaller hospitals being squeezed out, and expanding their use of hospital-employed physicians, rather than relying on community-based physicians with hospital privileges, and exercising greater control over medical staff.
Hospitals have become so pivotal in the U.S. healthcare system that the Patient Protection and Affordable Care Act of 2010 (PPACA) frequently targeted them as a vehicle to enhance patient safety and control escalating health care costs. One such provision - the Hospital Readmissions Reduction Program, which goes into effect in fiscal year 2013 - will reduce payments ordinarily made to hospitals if they have an 'excess readmission' rate.
It is estimated that adverse events following a hospital discharge impact as many as 19% of all discharged patients. When hospitals and similar health care facilities fail to adequately manage the discharge of their patients, devastating medical emergencies and sizeable healthcare costs can result.
The urgency to better manage these discharges is compounded by the fact that the average length of hospital stays continues to shorten, potentially increasing the number of discharged patients who are at considerable risk of relapse. Also exacerbating the problem is a lack of clarity regarding who, if anyone, is responsible for these patients following discharge. Confusion over who bears responsibility for discharge-related preparation and community outreach, concerns about compensation, a lack of clear institutional policies, and the absence of legal mandates that patients be properly prepared for and monitored after discharge all contribute to the potential abandonment of patients at a crucial juncture.
Although the PPACA establishes financial incentives for hospitals and similar facilities to combat the long-standing problem of high readmission rates, it does not provide a remedy for patients who have suffered avoidable harm after being discharged without adequate preparation or post-discharge assistance. This omission is particularly problematic as existing legal remedies, including medical malpractice suits, have provided little recourse for patients who have suffered injury that could have been prevented through the implementation of reasonable discharge-related policies.
To protect the many patients who are highly vulnerable to complications following discharge and to provide them redress when needed services are not provided, hospitals’ obligations to these patients should be recognized for what they are: a fiduciary duty to provide adequate discharge preparation and post-discharge services. The recognition of this duty is driven by changes in the nature of hospital care that enhance the perception that hospitals have become a 'big business' that should 'carry their own freight.' Properly interpreted, this duty requires facilities to implement an appropriate discharge plan and provide post-discharge services for a period of time commensurate with a patient’s continuing health risks. Notably, this is not the same as a generalized duty to provide all patients with continuing post-discharge treatment. It is a more limited obligation to offer necessary clarification and direction to patients upon discharge, and to institute a reasonable post-discharge monitoring program for patients with continuing health risks.
This recognition of hospitals’ responsibilities to discharged patients will have a number of beneficial effects. First, it will decrease healthcare costs by reducing the number of patients readmitted with post-discharge complications that could have been avoided through better communication and relatively simple, cost-effective follow-up services. Second, it will reduce confusion in the health care community regarding who is responsible for postdischarge services by affirmatively assigning responsibility to the entities best positioned to provide them, namely hospitals and similar discharging facilities. Third, specifically assigning these responsibilities to hospitals will establish them as a vital component of hospital care, which should help hospitals obtain reimbursement from third-party payors for providing them. Fourth, and most importantly, it will improve the well-being of discharged patients by better preparing them for discharge, increasing the availability of post-discharge services, and providing a means of recourse should they suffer readily preventable injury.
Keywords: health care, hospitals, patient discharges/readmissions, PPACA of 2010, hospital liability/fiduciary duties, torts, HC policy, medical jurisprudence, law & society
JEL Classification: I00, I10, I11, I12, I18, I19, I31, K13, K23, K32, R38, R48
Suggested Citation: Suggested Citation
Hafemeister, Thomas L. and Porter, Joshua Hinckley, Don’t Let Go of the Rope: Reducing Readmissions by Recognizing Hospitals’ Fiduciary Duties to Their Discharged Patients (February 22, 2013). 62 American University Law Review 513 (2013); Virginia Public Law and Legal Theory Research Paper No. 2012-57. Available at SSRN: https://ssrn.com/abstract=2147402