Hospitals Profit From Surgery Complications in Quality Conundrum

Reducing surgical complications could cost hospitals money, according to a study that researchers said may help explain why the medical providers haven’t fully embraced quality improvement efforts.

The study published in the Journal of the American Medical Association found hospitals have significantly higher profit margins when patients covered by private or public health insurers suffer surgical complications.

An estimated $400 billion is spent on surgery each year in the U.S., according to the researchers. The study found “clear evidence” that improving quality and reducing harm is penalized in the current health care system, said Sunil Eappen, chief medical officer of the Massachusetts Eye and Ear Infirmary in Boston, one of several institutions involved in the research.

“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,” said Atul Gawande, senior author and professor in the department of health policy and management at Harvard School of Public Health in Boston.

The research was conducted by Ariadne Labs, a joint venture of Brigham and Women’s Hospital and the Harvard School of Public Health, Boston Consulting Group, Massachusetts Eye and Ear, all based in Boston, and Texas Health Resources, based in Arlington, Texas.

The research found that hospitals received an additional $8,000 on average per patient for each complication, measured by the additional revenue generated over and above the extra cost of care. The difference was greatest for patients covered by private insurance, with an additional $39,017 per patient.

The financial incentive for complications was lower for those covered by Medicare at about $1,749 per patient. It was lower still for those covered by the Medicaid programs for the poor or among patients who pay for their own care.

The researchers examined data from 34,256 surgical patients treated in 2010 at a non-profit hospital system in the southern U.S. They looked for 10 severe, preventable complications, and found 1,820 procedures with at least one.

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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