NEW YORK—With penalties rising in 2015 for hospitals with high Medicare readmission rates, Columbia Business School research offers important new evidence that keeping patients in the hospital one day longer can significantly cut readmissions, save patient lives, and reduce costs. The study titled, “Should Hospitals Keep Their Patients Longer? The Role of Inpatient and Outpatient Care in Reducing Readmissions,” compares the impact of an extended length of stay in the hospital to the effects of outpatient care for Medicare patients. Researchers found that one additional day in the hospital can: Reduce mortality risk by 22 percent for patients treated for pneumonia Reduce mortality risk by 7 percent for heart-attack patients Result in five-to-six times more lives being saved when compared with outpatient care Decrease readmission rates by 7 percent for severe heart-failure patients   Additionally, the study showed that one extra day in the hospital would, in many cases, cost less overall than the associated outpatient care required with early discharge. Currently, about one in every five Medicare patients is readmitted to the hospital within 30 days of discharge, costing US taxpayers at least $17 billion annually.  “Given the stiff penalties imposed under the Affordable Care Act, hospitals are implementing a variety of approaches to aggressively reduce readmission rates, most commonly involving outpatient care,” said Ann P. Bartel, professor of finance and economics at Columbia Business School. “While some types of outpatient interventions can be effective, our study shows that hospitals should consider keeping some of their patients in the hospital longer to better control patient care, reduce readmissions and ensure fewer deaths.” Since the focus of the Affordable Care Act’s Hospital Readmissions Reduction Program has been to reduce readmissions of only those patients with heart failure, myocardial infarction or pneumonia, the study focused on these three distinct patient populations. The Research The research was performed by Ann Bartel and Carri Chan of Columbia Business School and Song-Hee Kim, a Ph.D student at the School at the time. The study analyzed medical records from the Centers for Medicare & Medicaid of more than 6.6 million Medicare patients ages 65 or older with in-hospital visits between 2008 and 2011. It compared the potential benefits of a one-day extended hospital stay to those of outpatient care in terms of reduced readmissions, death rates, and costs. “Currently, about one in every five Medicare patients is readmitted to the hospital,” said Carri Chan, associate professor of decision, risk, and operations at Columbia Business School. “Our findings show that one extra day in the hospital could reduce these readmission rates, ensure healthier patients, and save money.” To compare inpatient and outpatient care models, the research included patients covered by traditional Medicare and those covered by Medicare Advantage plans. Since traditional Medicare plans directly pay hospital costs on a fee-for-service basis, there was little incentive before the enactment of penalties for hospitals to prevent readmissions. On the other hand, the payment system for Medicare Advantage plans incentivizes insurers to reduce excess readmissions and therefore they provide better outpatient care to keep patients healthier and out of the hospital. To learn more about research being conducted at Columbia Business School, please visit www.gsb.columbia.edu.  ### About Columbia Business School Columbia Business School is the only world-class, Ivy League business school that delivers a learning experience where academic excellence meets with real-time exposure to the pulse of global business. Led by Dean Glenn Hubbard, the School’s transformative curriculum bridges academic theory with unparalleled exposure to real-world business practice, equipping students with an entrepreneurial mindset that allows them to recognize, capture, and create opportunity in any business environment. The thought leadership of the School’s faculty and staff, combined with the accomplishments of its distinguished alumni and position in the center of global business, means that the School’s efforts have an immediate, measurable impact on the forces shaping business every day. To learn more about Columbia Business School’s position at the very center of business, please visit www.gsb.columbia.edu.