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Improving Quality Patient Outcomes a Money Loser for Hospitals – Forbes

Surgical patients who have complications generate better margins for hospitals, a new study  in the Journal of American Medical Association has found.

Cue the outrage from the consumer media about “profit-hungry hospitals.”

Loss

Loss (Photo credit: nikoretro)

The New York Times story on the study, though balanced, carried an unfortunate headline, “Hospitals Profit From Surgical Errors, Study Finds,” which at best suggests that hospitals don’t want to improve quality of care because it will directly hurt their bottom line, and at worst, implies that hospitals may encourage poor care to generate high profits, an assertion that is akin to saying The New York Times encourages terrorism, because its website generates more traffic during a calamity.

The study examined the records of 34,256 patients within a healthcare system that operated a dozen hospitals and the authors have been careful to point out that they did not find any evidence of a deliberate attempt to keep quality low to boost margins. In a side interview with a JAMA editor, one of the authors of the study, Dr. Atul A. Gawande, was asked directly if he believed hospital administrators saw surgical complications as a fiscal benefit, and he dismissed the notion.

“It’s clear though that the evidence shows us that reducing harm and improving quality is perversely penalized,” Dr. Gawande said. “Making the case to invest in reducing complications with a good quality improvement team, that cost is hard to justify. Although they may not see complications as a profit center they see quality improvement as a loss center.”

The difference of contribution margin of privately insured patients who had complications versus those who did not was astounding, more than $40,000 on average; the profit was far less ($1,749) for Medicare patients and, the study found, that Medicaid and uninsured patients cost the hospital system more if they had complications.

Outside of how consumer media may position the results of the study, this is good news for healthcare providers. Improving quality is expensive, and thanks to this research, providers now have concrete evidence and hard numbers that demonstrate that cost in real dollar and its impact on margins.

Hospitals will take a financial hit (and in many cases a substantial financial expense) with every initiative that improves quality even by a small percentage. With this study, healthcare providers can extrapolate the true cost of quality improvement measures, and make the case that hospitals don’t need to be penalized to improve higher quality, but incentivized.

 

Evan J. Albright is a contributing editor to insidePatientFinance.com. He lives in Cape Cod, Massachusetts

Source Article from http://www.forbes.com/sites/insidepatientfinance/2013/04/17/improving-quality-patient-outcomes-a-money-loser-for-hospitals/
Improving Quality Patient Outcomes a Money Loser for Hospitals – Forbes
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