In a research study published in The Journal of the American Medical Association on April 17, 2013, the researchers found that hospitals make more money when patients suffer surgical complications compared to when patients do not experience surgical complications if the patients are on Medicare or have private health insurance. In the case of Medicaid or self-pay patients, the margin earned by hospitals was not as great. Therefore, it may be that hospitals may make less money if efforts to reduce surgical complications are effective, depending on the hospitals’ patient mix.
The researchers analyzed all inpatient surgical discharges that were made during 2010 for a nonprofit, 12-hospital system in the southern part of the United States. They looked at nine common surgical complications and ten major surgical complications that arose in patients during that period of time where the payer for the patients’ treatment was in one of the following four categories of payers: Medicare, Medicaid, private health insurance, or self-pay (patients without any health insurance coverage). Then, the researchers determined the “contribution margin” (the difference between the revenues the hospitals received for the patients’ care and the variable expenses incurred by the hospitals for the patents’ care) for those patients who sustained a surgical complication(s) and for those patients who suffered no surgical complication, in each of the four categories of payers.
The study involved the review of 34,256 surgical discharges of which 1,820 patients suffered one or more post-surgical complications. The study found that surgical complications resulted in a $39,017 greater contribution margin for patients with private health insurance and a $1,749 greater contribution margin for Medicare patients.
Hospitals enjoyed a 330% higher profit margin for patients with private health insurance who suffered surgical complications when compared to patients with private health insurance who experienced no surgical complications. Medicare patients who suffered surgical complications provided hospitals with profit margins 190% higher than for Medicare patients who did not have surgical complications. Taking into consideration that about $400 billion is spent on surgeries every year in the United States, the implications regarding hospital contribution margins for surgical patients are significant.
While the researchers analyzed only one hospital system in only one part of the United States, and looked only at surgical patients during 2010, if the results of the study can be extrapolated to the experiences of other hospitals and hospital systems throughout the United States, and depending upon the mix of hospital patients on Medicare, Medicaid, private health insurance, or self-pay, it would appear that if surgical complications are effectively reduced in the hospital setting, the financial result of such may have a negative impact on the earnings of hospitals. However, the study concluded that it is unclear what the effect would be on hospital finances if surgical complications are reduced.
If you or a loved one suffered surgical complications that may be the result of medical malpractice, you should promptly seek the advice of a local medical malpractice attorney to learn about your rights and responsibilities and whether you may have a claim for compensation for the injuries and harms caused by surgical malpractice.
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