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16-04-2013 | Hospitalist | Article

Some US hospitals may face disincentive to reduce postsurgical complications


Free abstract

medwireNews: The occurrence of postsurgical complications is associated with a higher hospital contribution margin for Medicare and private insurance beneficiaries but a lower one for patients who are covered by Medicaid or self-pay, show the results of a US study.

With costs being contingent on payer mix, efforts to decrease post-surgical complications could result in adverse near-term financial consequences for some hospitals, the study authors warn in JAMA.

The authors conducted a retrospective analysis of data on all inpatient surgical discharges during 2010 from a 12-hospital system in the southern United States, assessing nine surgical procedures and 10 major complications, including surgical site infection, pulmonary embolism, and cardiac arrest.

Of 34,256 patients undergoing surgical procedures, 1820 (5.3%) experienced at least one postsurgical complication. The patients were primarily covered by one of four primary payer types: private insurance (40%), Medicare (45%), Medicaid (4%), or self-payment (6%).

Compared with when they did not arise, complications were associated with a significant US$ 39,017 (€ 29,848) higher contribution margin (revenue minus variable costs) per patient with private insurance. The contribution margin was also significantly higher per patient with Medicare, at US$ 1749 (€ 1338).

By contrast, for Medicaid and self-pay procedures, the contribution margins associated with postsurgical complications were significantly lower per patient, compared with no complications.

Overall, a patient having at least one complication was associated with higher hospital costs regardless of payer type. When taking all patients into account, one or more complications were associated with a US$ 22,398 (€ 17,134) higher per-patient variable cost, US$ 37,917 (€ 29,006) higher per-patient total cost, US$ 8084 (€ 6184) higher contribution margin per patient, and a US$ 7435 (€ 5688) lower per-patient total margin.

"The payer mix will determine the overall economics of surgical complications for a given hospital," observe authors Atul Gawande (Harvard University, Boston, USA) and colleagues.

While complications were associated with a more than US$ 25,000 (€ 19,125) greater total margin among privately insured patients, Medicare, Medicaid, or self-pay encounters led to negative total margins regardless of complication.

"Payers bundling the average costs of complications into the base diagnosis related group payment for a surgical procedure or limiting the hospital's ability to recode retrospectively into a higher-paying diagnosis related group may give hospitals a stronger financial incentive to avoid complications," the authors say.

"Some hospitals could financially benefit in the long run by reducing complications if they could accept substantial near-term losses," they add.

medwireNews ( is an independent clinical news service provided by Springer Healthcare Limited. © Springer Healthcare Ltd; 2013

By Peter Sergo, medwireNews Reporter

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