Complications after surgery are making hospitals more money, according to a report on CNN Money.
According to the report, released by the Boston Consulting Group, hospitals draw higher profits from patients who experience complications—if the patient has Medicare or is covered under private insurance.
When a patient who has private insurance is suffers complications including stroke, infection, or blood clots, the profit margins for a hospital are 330 percent higher than a patient who does not suffer any complications, according to the report. For a patient covered by Medicare, the profit margins go as high as 190 percent.
When a patient with private insurance experiences a complication, hospitals get $56,000. When a patient with Medicare experiences a complication, hospitals get $3,600. When patients with Medicare or private insurance have no complications, hospitals receive $1,800 and $17,000 respectively.
According to Dr. Barry Rosenberg, a co-author of the report and partner with the Boston Consulting Group’s health care practice, the study is not implying that surgeons are erring on purpose. His desire for the study is to bring about talks about the “absolute need for payment reform.”
According to Rosenberg, hospitals see higher profits the longer a patient with Medicare or private insurance remains under its care. Therefore, there are not many financial reasons to input measures that will lead to a decrease in surgical complications.
"Insurers are rewarding hospitals when there are complications," Rosenberg said. "This is not the type of incentive you want ... in the healthcare system for your family."
The BGC looked over insurance billing data of over 34,000 in-patient surgeries done in 2010. 12 hospitals throughout the southern United States were analyzed for the study.
Out of all the operations, 1,820—or 5.3 percent—saw one or more complications.
Dr. Atul Gawande is a professor at Harvard School of Public Health and also a co-author of the study.
"It's been known that hospitals are not rewarded for quality, but it hadn't been recognized exactly how much more money they make when harm is done," he said.
According to the report, “safety-net” hospitals—hospitals that treat mostly Medicare-covered patients—experience the reverse effect. If there are surgery complications, they see a decline in profits.
Texas Health Resources and Ariadne Labs, a joint research center at Harvard School of Public Health and Brigham and Women's Hospital, aided with the study.
The study was published in The Journal of the American Medical Association.
