Hospitals profit from their mistakes, study says

May 30, 2013

In the United States, healthcare is like any other business--profits matter. Although few would begrudge a hospital's ability to make a fair profit, most, if not all, would object if the profit were derived from medical errors. According to a shocking recent study, hospitals are fattening their bottom lines from medical mistakes, as such mistakes require patients to undergo additional treatment and procedures.

The study, published in the Journal of the American Medical Association, analyzed the records of 34,256 surgical patients at a hospital operated by Texas Health Resources for the year 2010. Out of these patients, the study found that 1,820 patients suffered complications that the staff could have prevented, such as pneumonia, infections and blood clots.

As a result of the complications that the patients suffered, their average hospital stay quadrupled to 14 days. The study revealed that the patients with complications allowed the hospital to benefit financially, as the average revenue resulting from the treatment of such patients was $30,500 higher than it was to treat patients who did not develop complications.

Profit equals less incentive

Since hospitals make almost triple the revenue to treat patients with complications, it does not require much brainpower to realize that this would cause little incentive to address the problem of medical errors. As tweaking established processes and procedures to reduce medical errors costs money and, if successful, would ultimately lead to a loss of revenue, it does not make sense from a business standpoint to reduce the number of medical complications.

The study's authors said that they were not suggesting that hospitals intentionally cause complications to maximize their profits. However, the current fee-for-services system emphasizes quantity of medical care over quality. Experts say that the system must move towards a results-based model where good patient outcomes are financially rewarded before there can be any real incentive to reduce medical errors.

Government and insurers fight back

The federal government has stepped in to prevent hospitals from profiting from their mistakes by passing Medicare regulations. Such regulations encourage hospitals to avoid mistakes by refusing to pay for certain medical errors or reducing the amount of reimbursement that is paid if the hospital has a high number of patients that are readmitted.

Many private insurers have also taken a cue from the government and are also refusing to reimburse hospitals for the additional treatment caused by their medical errors. Many have a "never list" of things that they will not pay for, such as surgery done on the wrong body part or patient.

Consult an attorney

In addition to the possibility of not getting paid, hospitals that disregard patient safety can also face medical malpractice lawsuits. Under Rhode Island law, patients who are harmed as a result of medical errors can seek compensation for medical bills, past and future loss of wages and pain and suffering. If you have suffered an injury from a mistake made during your stay in a hospital, contact an experienced medical malpractice attorney to learn about your right to compensation.

Article provided by Vincent D. Morgera, Ltd., & the Law Doctors
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