Hospitals profit more from surgical complications

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Doctors perform perhaps the most important tasks of any professional: keeping us healthy. Considering the magnitude of their work, all medical care providers are held to high standards, as the consequences of mistakes are as serious as it gets. Quality patient care must be the priority at all times, and nothing can be allowed to get in the way of that. Yet, time and again some medical care providers place profits over patients. Instead of making all decisions based on the best interest of those who are relying on them, these parties look first to their own bottom line.
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© SquaredpixelsCNN and Channel 4 are reporting  on a study from the Boston Consulting Group which finds complications after surgery leads to higher profits  for hospitals.  In fact, privately insured surgical patients who had a complication provided hospitals with a 330% higher profit margin than those without a complication,  Medicare patients with a complication produced a 190% higher margin. The findings mean that, for hospital managers, efforts to reduce surgical complications could result in substantially worsened financial performance.  The study appears in the April 17, 2013 issue of the Journal of the American Medical Association (JAMA).
The report isn’t suggesting that complications are caused intentionally, said Dr. Barry Rosenberg, a co-author of the study. But he hopes the findings provoke discussion on the “absolute need for payment reform,” he said.  Hospitals make more money the longer a privately insured or Medicare patient stays, said Rosenberg, a partner with BCG’s health care practice. As a result, they may lack financial incentives to take steps to reduce surgical complications, he said.   “Insurers are rewarding hospitals when there are complications,” he said. “This is not the type of incentive you want … in the health care system for your family.”
An estimated $400 billion is spent on surgical procedures each year in the U.S. While effective methods to reduce complications have been identified, hospitals have been slow to implement them. Financial incentives may be a reason. The goal of the study was therefore to evaluate the hospital costs and revenues associated with having one or more major complications with surgical patients covered by four primary insurance types — private insurance, Medicare, Medicaid, and self-payment.
 
The researchers analyzed data from 34,256 surgical inpatients discharged in 2010 in a non-profit, 12-hospital system in the southern U.S. They looked at ten severe, preventable surgical complications and the contribution margin — revenue minus variable expenses — per patient. Hospitals receive $56,000 in working revenues on average when a privately insured patient has a complication, but only $17,000 when they’re complication-free, according to the report. They receive $3,600 when Medicare patients have a complication, vs. $1,800 when they’re free of complications.
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This sort of conduct is unconscionable.  It is important for both the civil and criminal law to be used to ensure these parties be held responsible for their actions.

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