29 April 2013

Hospital profits go up when complications occur

From Wonkblog:
A surgical complication increases a procedure’s average contribution margin by 330 percent for the privately insured and 190 percent for Medicare patients, according to a study published this week in the Journal of the American Medical Association.
The study underscores how ludicrous the incentives are in the American health care system, generally paying doctors for each medical service they provide, even if some of that care is the result of a surgery gone wrong...

The study does not imply that hospitals intentionally complicate surgeries to bring in more revenue. Most surgeries, about 95 percent, go off without a hitch. What it does suggest to the surgeon, writer and Harvard professor Atul Gawande is that hospitals now see little reason to invest in technologies that would reduce complications when the only prize at the end would be lower income...
More at the link.


  1. >hospitals now see little reason to invest in
    >technologies that would reduce complications
    >when the only prize at the end would be lower

    Isn't the fallacy in this argument, that hospitals see more costs than just operational costs? That is, if they have complications that could be avoided they will most likely be sued. This increases their cost, decreases their earnings or profits, and provides an incentive to reduce the occurrence or severity of complications -- such as by investing in new technology, or improving post operative care, or whatever.

    Similarly, if a patient can chose what hospital they receive services in, they will pick those with better track records for services, and avoid those hospitals with higher rates of complications after medical care. Again, this will reduce the hospitals revenues and earnings, and provide an incentive to invest to reduce these rates to be competitive against other hospitals which provide higher quality services.

  2. Many places don't let you sue... either by laws or patient contract.

    Also, you are assuming hospital #2 alone is willing to invest in the future past this next quarter's numbers (impossible in today's corporate america) AND place themselves on the uncharted fringes of best practices (unproven/not textbook).


Related Posts Plugin for WordPress, Blogger...