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Patients with surgical complications provide greater hospital profit-margins
Date:4/17/2013

ventable surgical complications and the contribution marginrevenue minus variable expensesper patient. A total of 1,820 procedures were identified with at least one complication.

The results showed that, for privately insured patients, complications were associated with a $39,017 higher contribution margin per patient ($55,953 vs. $16,936). For Medicare patients, the contribution margin per patient was higher by $1,749 ($3,687 vs. $1,880). For Medicaid and self-payment, complications were associated with significantly lower contribution margins than those without complications.

What that means, say the researchers, is that who pays for patients' care determines the financial implications of surgical complications. In this hospital system, private insurers covered 40% of patients, Medicare covered 45%, Medicaid covered 4% and 6% were self-pay, a breakdown that is comparable to the average U.S. hospital in 2010. Overall in this hospital system, complications were associated with a more than $8,000 higher contribution margin per patient.

At safety-net hospitals, which treat patients primarily covered by Medicaid or self-pay, reducing complications could improve financial performance. However, the study shows that at most U.S. hospitals, programs to reduce complications would worsen their financial performance.

"This is clear indication that health care payment reform is necessary," said Gawande. "Hospitals should gain, not lose, financially from reducing harm."

The research was funded through support from the Boston Consulting Group and from Texas Health Resources.


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Contact: Marge Dwyer
mhdwyer@hsph.harvard.edu
617-432-8416
Harvard School of Public Health
Source:Eurekalert

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