June 25, 2014

Hospitals Profit from Surgical Complications

Hospitals Profit from Surgical Complications

While hospitals may currently profit from complications and readmissions, the trend in reimbursement is away from such benefits. In fact, many hospitals are working on hospital/physician co-management agreements to more closely align the financial benefits of less complications. Even where a hospital “loses” money based on better outcomes, the hospitals are incentivizing physicians and administration staff on better outcomes and less readmissions. Marcum assists in the determination of fair market value determination in many of the co-management arrangements.

Hospitals make more of a profit when surgical patients develop complications finds a new study published Wednesday in JAMA. A team of researchers analyzed findings from nearly 35,000 surgical discharges from a 12-hospital system in the southern U.S. They found that the occurrence of postsurgical complications was associated with a higher per-encounter hospital contribution margin for patients covered by Medicare and private insurance but a lower margin for patients covered by Medicaid and those who self-paid.

According to the study, the authors found that the rate of inpatient surgical complications is significant, with estimates ranging from 3 percent to 17.4 percent, depending on type of procedure, type of complications, length of follow-up and data analyzed. In addition to patient harm, major complications add substantial costs, previously estimated at $11,500 per patient.

Overall, out of 34,256 surgical discharges examined in the study, 1,820 patients (5.3 percent) experienced one or more postsurgical complications. Study researchers found that the occurrence of one or more complications was associated with higher hospital costs in all payer types but hospital revenue varied by payer type.

Compared with patients without complications, patients experiencing one or more complications were associated with a higher contribution margin of $39,017 per patient with private insurance ($55,953 versus $16,936) and $1,749 per Medicare patient ($3,629 versus $1,880). (Healthcare Finance News)

Source: Physician News Digest

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