KANSAS CITY, Mo. — In the business world, when the customer has problems, the business doesn’t get rewarded. But when things go wrong in hospitals? A new study shows hospitals’ profit margins skyrocket when patients have complications.
New Harvard research published in the Journal of the American Medical Association finds that when a privately insured surgery patient has complications, the hospital makes about three and a third times more than when a patient doesn’t have complications.
The profit margin was $39,000 more on average per patient. For Medicare patients, the margin was not as great, but still almost twice as much.
Researchers say until now, it hasn’t been fully recognized how much more money hospitals make when harm is done. Researchers say reducing harm and improving quality are perversely penalized in the current health care system.
“This is very troubling,” says Gina Danner, the CEO of Mailprint, a Kansas City company that prints direct mail.
Danner says after all, her company is paying for those surgical complications through health insurance it provides employees.
“It’s costing me a lot. Let me tell you, it’s way up there and I think that just points to — we have to figure out how to cut costs across the board in the delivery of care in our society,” says Danner.
The government and some private insurers have stopped paying hospitals when certain mistakes happen. But researchers say more payment reform is necessary so that hospitals gain, instead of losing financially, from reducing harm.
Neither the Kansas or Missouri Hospital Association responded to our requests for interviews. A health insurer, Blue KC, declined an interview.