Hospital Stay Complications and Financial Consequences

One of the current methods for improving quality is to ensure that health care providers don’t gain financially, and may actually suffer, if they make medical errors or otherwise deliver poor quality.  Research published in the Journal of the American Medical Association suggests we have a way to go before we get to that point.   (JAMA Study)   The researchers compared the financial consequences to hospitals from caring for patients with and without surgical complications.  Surgery expenses total about $400 billion in the US and complication rates are estimated at from 3% to 17%, depending on procedure and definition of complication.  Complications typically add a fairly substantial cost to the surgery.  While there has been an increase in payers refusing to pay for certain complications, typically categorized as “never events”, most complication treatment is still reimbursed and may result in higher revenues and profits for hospitals.  The authors looked at about 34,000 surgery discharges at a twelve hospital system in the southern US.  About 5% of patients experienced a complication.  The median length of stay was about 4 times as high for patients with a complication and the costs related to these patients was about $38,000 greater.  But the contribution margin was $8000 more for these patients.  Private insurance paid significantly more for complication-related stays than did Medicare, but for Medicaid and self-pay patients, the contribution margin was lower.  Private insurers in particular end up providing hospitals with significantly greater margins for stays involving complications.  Therefore, somewhat contradictorily, cleaning up complication rates would probably cause a deterioration in hospital finances.  The authors did not, however, attempt to ascertain the extent to which complications were avoidable or the fault of the hospital.  This may turn out to be much like readmissions, where it is unclear that there really is a large number which could be prevented.