Hospital Errors Make Money?

A recent JAMA study got some nice media attention (like in this NYT piece) when it concluded that hospitals profit from surgical errors:

  • Hospitals make money from their own mistakes because insurers pay them for the longer stays and extra care that patients need to treat surgical complications that could have been prevented, a new study finds.
  • Changing the payment system, to stop rewarding poor care, may help to bring down surgical complication rates, the researchers say. If the system does not change, hospitals have little incentive to improve: in fact, some will wind up losing money if they take better care of patients.

It’s obvious, right?  I mean doctors and hospitals are colluding to do poor care to make more money.   C’mon, that accusation is such bullshit.   I love how the authors go right into recommending changing the payment system for “quality” care.   Once again, an unproven concept.

Then this article came out.  It seems the JAMA study assumed that the beds would go empty if the patients were discharged “on time” and there were no complications.  But alas, almost all hospitals are filled at almost all times.

  • This is what the authors assumed (and mentioned as a limitation): “We did not estimate the effect of 3 potential factors that could affect the hospital economics of surgical complications. First, the shorter lengths of stay of procedures without complications could benefit the small percentage of hospitals operating at full capacity because they might be able to admit additional patients with favorable insurance who were “crowded out.”
  • What this means is that they did not include any profits that might be generated by an empty bed in a hospital. In the study, around 5% of patients developed a complication and stayed an excess of 11 days (at the median) – the mean would be higher.

The truth of the matter is that constantly moving fresh and new patients in and out of the hospital is much more profitable then some conspiracy to cause errors and keep the same ones there longer.   This study was garbage and a political play by a biased group of researchers.


Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  5 comments for “Hospital Errors Make Money?

  1. Ellen, RPh
    April 24, 2013 at 11:47 am

    Ok but what about learning the difference between then and than? Sorry but it’s a real irritation to me especially when written by someone who is supposedly well educated.

    • Doug Farrago
      April 24, 2013 at 12:20 pm

      Really? Your life is that perfect that you need to bitch to me about than and then? Maybe I should fire my staff? How about this….if you don’t like what I write then don’t read it. Is that correct?

  2. Doug
    April 19, 2013 at 10:09 am

    When hospitals are incentivized for less than a 24 hour patient stay, they may fraudulantly submit an outpatient charge to medicare/medicaid even if the patient stayed longer. This is serious fraud.

    • Pat
      April 19, 2013 at 4:02 pm

      No doubt!

  3. Pat Conrad
    April 19, 2013 at 9:13 am

    But how did the patients with complications score the hospitals on their satisfaction surveys? What if the longer stays resulted in happier patients and better satisfaction scores? We’re told that is a critical quality indicator, so we have a real conundrum,here.

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