Surgery-Related Complications More Beneficial To Hospitals' Bottom Line

April 23, 2013

Going through a surgical procedure can be a nerve-wracking event. As a patient, you put your trust in your surgeon's experience and skill to provide you with excellent care. But even in the best situations, complications can occur--either during the operation or following the procedure, sometimes leading to medical malpractice lawsuits. While doctors and patients alike hope to avoid any kind of surgical errors, hospitals have been shown to gain financially from post-surgical complications.

A new study of a group of southern hospitals reveals that the "contribution margin," or profit per patient, is higher when patients have one or more complications following surgery. The study's senior author, Dr. Atul Gawande from Brigham and Women's Hospital and the Harvard School of Public Health, emphasizes that this information is not to suggest that hospitals are counting on surgical complications to bring in more money. The real problem lies in the way hospitals are paid for patients covered by Medicare or private insurance versus those who pay out-of-pocket or are covered by Medicaid.

Researchers evaluated the hospital group's financial information over the course of caring for over 34,000 patients in 2010. Close to 2000 of those patients experienced one or more complications following surgery. Privately insured patients who experienced no complications netted the hospitals an average of $17,000 of profit; for those with one or more complications the profit jumped to an average of $56,000. Comparatively, hospitals lost money in all surgeries involving Medicare patients and patients paying out-of-pocket, regardless of complications.

While it seems obvious that hospitals stand to profit more when patients require additional procedures due to surgical errors and complications, the study's authors hope to illustrate the problems with this financial system. "We are trying to unravel why simple quality measures have been so slow to penetrate into health care and finances are clearly part of the picture," Dr. Gawande says. "The incentive is to pay for quantity, not quality." In other words, in the current market if hospitals were to implement programs to improve the quality of care and reduce post-surgical complications, they would actually lose money.

Dr. Gawande and his colleagues worked with the hospital group in the study to institute quality-improvement programs and renegotiate contracts with insurers, which resulted in fewer surgical errors, complications and deaths. It is their belief that similar changes need to be made between hospitals and insurers to improve the quality of care for all patients without penalizing the health systems that serve them.

Sources:

Reuters.com, Reducing Complications May Cost Hospitals Money, 4-16-13

JAMA, Reimbursement Systems May Hinder a Hospital's Ability to Reduce Postsurgical Complications, 4-16-13