Surgical Complications = More Money for Hospitals

April 23, 2013

Hospitals Make More Money When You Suffer From Surgical Complications

We complain about the cost of insurance. We scapegoat all sorts of people, including attorneys, for the increase in cost. Well here’s an interesting reality. When your surgery results in complications, hospitals make more money. How’s that for causing an increase in what insurance companies have to pay out? That’s right. Surgical Complications equal more money for hospitals.

Outrageous? You bet. How are we to encourage hospitals to be efficient and to do a good job if the result is less money? This makes no sense.

The Report

What we have learned is that if a patient suffers a surgical complication, for example: stroke, infection, pneumonia, cardiac arrest and so on, the hospital has a higher profit margin versus patients who do not suffer complications. What kind of profit margin? Well, as much as 330% higher for those with private insurance, and 190% higher for those on medicare.

The Bottom Line – Hospitals Benefit From Surgical Complications

In plain dollars and cents, if a privately insured patient has a complication, the hospitals receive an average of $56,000. No complication? $17,000. For Medicare patients, hospitals receive $3,600 when there is a complication. No complication? $1800.

What Does This Mean for Patients in Hospitals?

No one is suggesting that hospitals are intentionally risking malpractice by harming their clients. But at the same time, what incentive do hospitals have to minimize chances of such things as infections?

An author of the study, Dr. Barry Rosenberg, states “Insurers are rewarding hospitals when there are complications. This is not the type of incentive you want … in the healthcare system for your family.”

What Should We See?

Clearly this straight payment for medical services is not working. There is no incentive for hospitals to do everything possible to minimize complications for those who are privately insured or who have Medicare.

We, as a country should be encouraging hospitals to do everything they can to reduce complications by providing financial incentives for those reductions, instead of paying more when something goes wrong. We should not be rewarding hospitals when patients experience surgical complications.


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