• Study
  • Published April 2013

Relationship between occurrence of surgical complications and hospital finances.

  • Classic

The business case for patient safety relies on the assumption that adverse events are financially harmful to hospitals over the long term, so up-front investment in safety improvement will eventually result in savings. However, this study cogently demonstrates that—at least for the specific case of surgical complications—hospitals actually profit when patients experience adverse events. Analysis of more than 30,000 surgical procedures revealed that hospitals received significantly greater net reimbursement for patients who experienced complications compared with those who had no complications. This disparity was particularly evident for patients with private insurance, although it was present to a lesser extent for patients with Medicare. This counterintuitive finding vividly demonstrates that, despite efforts such as the Centers for Medicare and Medicaid Services' policy of not paying for errors, payment incentives are not aligned to the extent that would truly encourage innovative approaches to improving safety. As the noted health economist Dr. Uwe Reinhart points out in his accompanying editorial, the findings of this study arise directly from a payment system that rewards providers for the volume rather than the quality of service provided.

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