If you’ve ever wondered how hospitals make their money, you may be surprised to learn that botched surgeries can lead to a significant increase in profit. According to a study by Harvard, the Boston Consulting Group, and Texas Health Resources, when doctors make mistakes during surgery, the hospital’s profits can triple for that particular procedure.
This isn’t just a minor issue – it reflects a much larger problem within the American healthcare system. Healthcare costs continue to rise, while the quality of care provided often falters. In this article, we’ll take a deeper look at why this occurs and what can be done to address this troubling reality.
The Frightening Facts
The study found clear evidence that the current American healthcare system is perversely penalized when it comes to reducing harm and improving quality. Sunil Eappen, M.D., Chief Medical Officer of the Massachusetts Eye and Ear Infirmary, highlights this disturbing trend in his research. When a private health insurance patient undergoes surgery and the physician makes a mistake, the hospital reaps a financial windfall. In fact, complications from botched surgeries can generate an average of more than $39,017 extra profit per patient: $55,953 vs. $16,936.
For Medicare patients, the profit margin per patient increases by an average of $1,749 ($3,687 vs. $1,880). However, for Medicaid patients and those paying for their own care, complications were associated with significantly lower profit margins than those without complications.
Why Hospitals Profit From Poor Care
It may seem counterintuitive for hospitals to make more money from providing poor care, but the current healthcare payment system is built to reward this very outcome. Atul Gawande, M.D., Director of Ariadne Labs and Professor in the Department of Health Policy and Management at the Harvard School of Public Health, says: “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.”
So, why does this happen? It all comes down to how healthcare is reimbursed. When complications arise during surgery, the hospital can bill for additional treatments and procedures that are necessary to address the issue. This can range from longer hospital stays to secondary surgeries or even costly specialist consultations. All of these additional services drive up the overall cost of care and, consequently, the hospital’s profit margin.
The Need for Healthcare Payment Reform
The research conducted by Harvard, the Boston Consulting Group, and Texas Health Resources reveal a stark reality: hospitals should gain, not lose, financially from reducing harm. This is where healthcare payment reform becomes critical. By implementing changes to the current payment structures to reward quality care and penalize poor performance, hospitals will have a stronger incentive to reduce errors and improve patient outcomes.
Many stakeholders, including healthcare providers, insurance companies, and government agencies, are currently exploring various reform initiatives. One potential solution is implementing a value-based payment system, where hospitals are reimbursed based on the quality of care they provide, rather than the number of procedures performed.
Another possible reform is the concept of bundled payments, where a single payment is made for all services incurred during a patient’s episode of care. This would encourage hospitals to carefully manage resources and identify any potential errors to avoid incurring additional costs.
What You Can Do
While healthcare reform may seem like a daunting and complex issue, there are actions you can take to protect yourself and your loved ones from the pitfalls of poor care:
- Research your provider: Before choosing a healthcare provider, conduct thorough research, including reading reviews and asking for recommendations. Make sure the provider has a strong track record in the type of care you need.
- Communicate openly: During your consultations or hospital stay, don’t hesitate to ask questions about your care. Make sure you fully understand the planned course of treatment and any potential risks.
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Be vigilant: Keep an eye on your condition and recovery. If something doesn’t seem right, speak up immediately. It’s better to be proactive than to suffer the consequences of a preventable error.
In conclusion, it’s essential for both patients and healthcare professionals to be aware of the financial incentives that can encourage poor care within the current healthcare system. By pushing for payment reform that rewards quality care and penalizes errors, we can begin to reshape the landscape and prioritize patient well-being above all else.
