Poor Surgical Quality: Who Pays for the Consequences?

When comparing the quality of healthcare with other developed countries, the system in the United States is known to fall short. In fact, a 2014 international study compared 11 nations, including the US, UK, Switzerland, Germany, Canada and others, on healthcare quality, and sure enough the U.S. healthcare ranked last among the wealthy countries.[1] Some health status measures, such as life expectancy and mortality, can have a misleading effect on the overall effectiveness of health system, yet there is no doubt that patient safety problems are more prevalent in the United States – available data on mortality due to surgical and medical errors show that the United States has relatively high rates in comparison with other OECD countries.[2]

The hospital ‘revolving door syndrome’ seems to be a chronic malady of the U.S. healthcare system, as up to 17.4% of patients are readmitted after surgical procedures. [3] It is quite clear that postoperative adverse events occur frequently – with healthcare-associated infections being the most common complication. This adds billions of dollars to healthcare costs every year, and the burning question is ‘Who bears the financial risk associated with complications of poor quality care?’

A study published by the American College of Surgeons looked into the problem in 2006, with the goal to determine whether it was the medical providers, i.e. hospitals, or the payers, i.e. patients, who incur a larger burden of increased hospital costs associated with postoperative complications. Not surprisingly, the conclusions of the study are not in favor of the patients:

● Reimbursement for patients without complications exceeded hospital costs and thus generated a hospital profit margin of 23%.
● For patients with complications, hospitals still received reimbursement, but the profit margin declined to 3.4%.
● The costs for healthcare payers always increased when complications occurred – there was an average increase in reimbursement of 54% per patient.

In other words, both hospitals and payers suffer financially as a consequence of poor quality care, but the payers bear a larger burden of the costs. As the reimbursements typically cover their costs, hospitals only experience a decline in their profits and profit margins with complications, while payers always lose money and thus have a larger stake in improving the quality of medical care. [4]

One of the ways to improve the quality of medical care, and specifically of surgical procedures, is pre-negotiated bundled case pricing for surgeries. Entrepreneurial firms like BridgeHealth assist self-insured organizations and their plan members with finding the best qualified medical provider in the area, using only surgical programs ranked within the top 25 percent nationally, as well as negotiating bundled prices that will eliminate any potential extra costs associated with postoperative complications. As the pre-negotiated bundled prices are binding, BridgeHealth solutions give patients and their employers better control over healthcare costs, and inherently force medical providers to minimize adverse events and hospital readmissions.

1) Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares Internationally, The Commonwealth Fund, http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror
2) How Does the Quality of U.S. Health Care Compare Internationally?, Timely Analysis of Immediate Health Policy Issues, E. Docteur & R.A. Berenson, August 2009, http://www.urban.org/sites/default/files/alfresco/publication-pdfs/411947-How-Does-the-Quality-of-U-S-Health-Care-Compare-Internationally-.PDF
3) NEJM: One in Seven Surgical Patients Is Readmitted within 30 Days, The New England Journal of Medicine, https://www.advisory.com/daily-briefing/2013/09/19/nejm-one-in-seven-surgical-patients-is-readmitted-within-days
4) Who Pays for Poor Surgical Quality? Building a Business Case for Quality Improvement, Journal of the American College of Surgeons, https://www.researchgate.net/publication/7048053_Who_Pays_for_Poor_Surgical_Quality_Building_a_Business_Case_for_Quality_Improvement