BACKGROUND AND OBJECTIVE: Like their adult counterparts, pediatric hospitals are increasingly at risk for financial penalties based on readmissions. Limited information is available on how the composition of a hospital's patient population affects performance on this metric and hence affects reimbursement for hospitals providing pediatric care. We sought to determine whether applying different readmission metrics differentially affects hospital performance based on the characteristics of patients a hospital serves. METHODS: We performed a cross-sectional analysis of 64 children's hospitals from the Children's Hospital Association Case Mix Comparative Database 2012 and 2013. We calculated 30-day observed-to-expected readmission ratios by using both all-cause (AC) and Potentially Preventable Readmissions (PPR) metrics. We examined the association between observed-to-expected rates and hospital characteristics by using multivariable linear regression. RESULTS: We examined a total of 1 416 716 hospitalizations. The mean AC 30-day readmission rate was 11.3% (range 4.3%-19.6%); the mean PPR rate was 4.9% (range 2.9%-6.9%). The average 30-day AC observed-to-expected ratio was 0.96 (range 0.63-1.23), compared with 0.95 (range 0.65-1.23) for PPR; 59% of hospitals performed better than expected on both measures. Hospitals with higher volumes, lower percentages of infants, and higher percentage of patients with low income performed worse than expected on PPR. CONCLUSIONS: High-volume hospitals, those that serve fewer infants, and those with a high percentage of patients from low-income neighborhoods have higher than expected PPR rates and are at higher risk of reimbursement penalties.