The Tyranny of Metrics

by Jerry Z. Muller

Hospital readmissions have indeed declined, a much-touted success for performance metrics. But how much of that success is real? The falling rate of reported readmissions was due in part to gaming the system: instead of formally admitting returning patients, hospitals placed them on “observation status,” under which the patient stays in the hospital for a period of time (up to several days), and is billed for outpatient services rather than an inpatient “admission.” Alternatively, the returning patients were treated in the emergency room. Between 2006 and 2013, such observation stays for Medicare patients increased by 96 percent. That meant that about half the drop in readmissions was actually due to patients who had in fact returned to the hospital but were treated as outpatients.