Reducing surgical complications may increase costs

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1. One or more postsurgical complications is associated with a significantly higher per-patient total cost.  

2. Private insurers reimburse hospitals significantly more for postsurgical complications than does Medicare and Medicaid.  

Evidence Rating Level: 2 (Good) 

Study Rundown: While the postsurgical complication rate may never be eliminated, hospitals across the country have been trying to improve patient outcomes. Improving postsurgical patient outcomes reduces cost to the patient while also allowing for the redistribution of hospital time and resources. Furthermore, reducing postsurgical complications is conventionally considered to be a way to decrease the financial burden to the hospital. This study focused on the effect postsurgical complications have on the patient’s contribution margin, calculated as revenue minus variable cost associated with each patient.

The authors of this study demonstrate that efforts to decrease postsurgical complications may be met with negative near-term financial consequences to the hospital. Further, it was shown that private insurers reimburse hospitals much more generously than do Medicare and Medicaid. While this study did involve a large patient population, the study is limited in its applicability due to the variability in the distribution of private insurance, Medicare, and Medicaid among different hospitals. This variability can dramatically alter the financial burden each hospital faces from postsurgical complications. As payment models change, it will be important to reassess its effects on the cost of post-surgical complications from the perspective of hospital financial burden.

Click to read the study in JAMA

In-Depth [retrospective study]: This retrospective analysis evaluated 34,256 surgical discharge patients from a 12-hospital system in the southern United States. Only data from inpatient surgical patients who were discharged during the 2010 calendar year was analyzed. For each surgical discharge, financial information was retrieved from the hospital’s accounting system to calculate variable cost, fixed cost, contribution margin, and total margin. Occurrence of 1 or more complications was associated with a $22,298 higher per-patient variable cost (95%CI, $18,097-$25,682) and with a $37,917 higher per-patient total cost (95% CI, $31,017-$43,801).

Private insurance surgical complication patients were associated with a higher contribution margin of $39,017 (95% CI, $20,069-$50,394; p<.001) per patient compared to those without complications. Medicare surgical complication patients were associated with a $1,749 (95% CI, $976-$3287; p<.001) higher contribution margin per patient compared to those without complications.

By John Prendergass and Rif Rahman

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