Hospitals Profit More From Surgical Mistakes, Complications [Study]

Hospitals profit more from complications during surgery than a normal operation, according to a new study released on Tuesday by the Boston Consulting Group.

The report found that a hospital’s profit margins are 330 percent higher when a privately insured patient experiences one or more complications. For Medicare patients, the profit martins are 190 percent higher.

Complications can include blood clots, stroke, infection, septic shock, pneumonia, or cardiac arrest. Dr. Barry Rosenberg, a co-author of the study, cautioned that the report doesn’t mean that complications are caused intentionally to help the hospital get more money.

Instead, he hopes that the study, published in The Journal of the American Medical Association, will inspire discussion about the “absolute need for payment reform.”

Rosenberg, a partner with BCG’s health care practice, explained that hospitals make more money the longer a Medicare or privately insured patient stays. Because of this, there may be a lack of incentives to make sure that hospitals reduce surgical complications. He added:

“If you go out and do all that hard work and reduce your hospital’s surgical complication rate, the prize that you get at the end of that is lower profitability. That’s crazy. It shouldn’t be that way. We would much prefer a system that would somehow reward that hospital for doing all the work to reduce their complication rate.”

Surgeries in the United States cost about $400 billion per year. But, if insurers gave hospitals an incentive to reduce surgical complications, it is likely that number would decrease. The study by BCG analyzed insurance billing data from over 34,000 in-patient surgeries performed in 2010 in the southern United States. Of the surgeries studied, 5.3 percent, or about 1,820 patients, saw at least one complication.

Dr. Atul Gawande, a professor at Harvard School of Public Health and co-author of the study, wrote in the report, “It’s been known that hospitals are not rewarded for quality, but it hadn’t been recognized exactly how much more money they make when harm is done. Hospitals should financially gain, not lose, by reducing harm.”

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