Effects of Hospital-Acquired Conditions on Readmission Risk: The Mediating Role of Length of Stay

Problem definition: Hospital-acquired conditions (HACs) represent undesirable complications that occur during a hospital stay. HACs can compromise patient safety and care outcomes and result in unnecessary socio-economic costs. Although hospitals are expected to reduce the incidence of HACs, few studies have examined the implications of HACs on other clinical outcomes and measures of hospital performance. This study contributes to the literature by exploring the relationship between exposure to a set of target HACs, length of stay (LOS) performance, and 30-day readmission risk. Methodology/results: To estimate the effects of HACs, we conduct econometric analyses using patient-visit-level data for heart attack, heart failure, and pneumonia patients hospitalized in the U.S. state of Florida during 2010–2014. We define LOS performance as the deviation of LOS from the Geometric Mean LOS (GMLOS), a standard LOS set by the Centers for Medicare and Medicaid Services. First, we find that exposure to HACs leads to a 37% increase in the odds of readmission and a 79% increase in LOS. Second, an increase in LOS is associated with a decrease in readmission risk, and this decrease is stronger for patients exposed to HACs. Third, LOS performance mediates the HACs-readmission risk relationship, such that the increase in the readmission risk of a HAC patient can be fully suppressed by the patient’s LOS. Fourth, we find that for patients exposed to HACs, the benefits of a longer LOS are almost entirely capitalized when the LOS becomes 65% longer than the GMLOS. Managerial implications: We demonstrate that, when addressing the consequences of HACs, clinicians also face indirectly a trade-off between reducing readmissions and controlling costs. We proffer LOS as a potential mechanism under hospitals’ control for mitigating the adverse effects of HACs on readmission risk. Thus, this study offers guidance to clinicians having to decide when to discharge patients with exposure to HACs. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0088 .