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Mixed Financial Incentives for Hospitals to Reduce Surgical Complications’ Frequency
Surgical complications are something that neither patients nor hospitals want. With low complication rates being increasingly recognized as an important measure of good hospital performance, initiatives to lower complication rates are being pursued with the expectation of helping patients and reducing payers’ reimbursement expenses and providers’ costs.
A Health Affairs Web First study  released today reexamines the business case for hospitals’ embracing surgical complication programs. Using data on costs and reimbursements compiled by researchers at the University of Michigan and adjusting them to 2010 dollars, Daniel Krupka of Twin Peaks Group and coauthors find that a hospital would suffer a negative cash flow if its surgical inpatient load is not growing. For a hospital performing 10,000 inpatient surgeries per year, annual cash flow could drop by more than $1 million for each 1 percent drop in the complication rate.
Because reducing complications creates bed capacity, hospitals growing fast enough to fill the “empty” beds could experience cash flow growth comparable in magnitude to the loss suffered if they were not growing. The authors conclude by recommending that “hospitals with limited growth prospects that are nonetheless contemplating a surgical complication reduction program establish agreements with payers to share in any savings generated by the program.”
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