How do readmission rates affect inpatient revenue?

Established in 1977, Krona Community Hospital is a 60-bed, acute care hospital located in the heart of Banconota County. With a staff of nearly 100 physicians and specialists, 400 employees and 75 volunteers, they offer a full range of health care services. They are accredited by The Joint Commission.
Nouveau Health, a private, not-for-profit health care chain, took over management Krona Hospital. Last year, state officials began to discuss Nouveau’s proposal to build a new, replacement hospital in Banconota County. The new facility would have 74 acute care beds, four observation rooms, four surgical operating rooms, one c-section room, a 24-hour emergency department, a maternity center, an intensive care unit, and an extensive outpatient center that will provide service such as diabetes treatment, physical therapy, speech pathology, and so forth.
You are a staff member in the finance department at Nouveau Health, whose sole responsibility is to advance the success of the organization through assisting in planning, forecasting, and finance management.
Primary Task Response: A wellness program includes services with exercise programs and chronic disease management to catch problems early so that a customer can be seen in urgent care or a doctor’s office instead of ending up in the hospital.  It increases outpatient revenue and decreases inpatient admissions and readmissions thereby, hopefully, decreasing risk for financial loss. Familiarize yourself with an example of a wellness center at the following web site:
 
http://www.sw.org/location/waco-getterman-wellness-center
 
Based on Krona’s budget, consider the effects that a Wellness Program provides to Krona.  If the wellness program is to include outpatient revenue, home health revenue, and pharmacy revenue, discuss how outpatient and inpatient revenue will differ with these budgetary goals.  Include the following:

What has to occur for inpatient revenue to increase? 
How do readmission rates affect inpatient revenue? 
How do outpatient services increase reimbursement in a Wellness Center? 
How can expenses be controlled to improve revenue?

Click here for last year’s budget.
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