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Observation Care: Navigating the Challenges of Outpatient Hospital Stays

observation-care-640-3In a new position paper, HOK Healthcare consultants Anthony Rosania and Kathleen Schwarz examine the benefits and pitfalls of observation care and reveal how short-term outpatient stays can impact patient health outcomes and hospital finances.  

observation-care-thumbnail-2Observation care within U.S. hospitals has increased rapidly over the past two decades as the Center for Medicare & Medicaid Services (CMS) and private health insurers look to control the costs of short-term hospital stays. Hospitals that admit patients the CMS deems eligible for less-expensive observation care run the risk of reimbursement denials. This financial threat has led some hospitals to routinely place borderline patients under observation care. Yet this “safe choice” also can be a money-losing proposition as observation care can have equal expenses as inpatient care with far less remuneration for services. Placing patients under observation care also disqualifies them for subacute care following discharge. 

This damned-if-you-do, damned-if-you-don’t scenario has many healthcare administrators second-guessing their observation care protocols and strategy. In “Observation Care: Navigating the Challenges of Outpatient Hospital Stays,” HOK’s Anthony Rosania (M.D., M.H.A) and Kathleen Schwarz (R.N., M.P.A.) layout how hospitals can and should effectively use observation care to improve health outcomes and mitigate financial risk and offer recommendations on how healthcare administrators and health policy experts can improve future hospital stays—regardless of their distinction as outpatient or inpatient.

Download a PDF (224 KB) of Observation Care: Navigating the Challenges of Outpatient Hospital Stays.