This study finds that almost one-fifth of Medicare beneficiaries who are discharged from a hospital are readmitted within 30 days. The estimated cost to Medicare for these unplanned rehospitalizations in 2004 was $17.4 billion. The authors recommend implementation of certain interventions at the time of discharge, reliable and prompt follow-up care by primary care physicians, and aggressive management of chronic illnesses to reduce avoidable rehospitalizations.