Medical economics: Do hospitals profit from surgical errors?

New Jersey residents will find it interesting to learn that a recent study published in the Journal of the American Medical Association found that hospitals may profit from the surgical errors and mistakes they make.

The study examined records of over 34,000 surgical patients in 2010 at one hospital run by Texas Health Resources, which is a large nonprofit hospital system. About 1,820 of those patients suffered from one or more preventable complications such as a blood clot, pneumonia or infected incisions. As a result of the complications, the patients’ median length of stay quadrupled to 14 days and on average, gave the hospital revenue of $30,500 more than for patients without complications. Further, patients on Medicare and Medicaid or those who paid out of pocket paid far less than what private insurers paid.

The authors of the study noted that the current system of payment makes it hard for hospitals to provide better treatment because they may actually have a financial incentive to continue practices that result in mistakes. They note that changing the current payment system and not rewarding substandard or poor care may help bring down rates of preventable surgical complications.

According to a Princeton University expert on medical economics, this study highlights the disturbing but perhaps not surprising finding that profitable hospitals may have little incentive to improve. Nevertheless, private insurers and Medicare have pushed for better care by refusing to compensate hospitals for certain “never list” medical errors such as leaving a sponge inside a patient or operating on the wrong organ or limb.

Source: New York Times, “Hospitals Profit From Surgical Errors, Study Finds,” Denise Grady, April 16, 2013