Patients with surgical complications provide greater hospital profit-margins

Privately insured surgical patients who had a complication provided hospitals with a 330% higher profit margin than those without a complication, according to new research from Ariadne Labs, a joint center for health system innovation at Brigham and Women’s Hospital (BWH) and Harvard School of Public Health (HSPH), Boston Consulting Group, Texas Health Resources, and Massachusetts Eye and Ear Infirmary. Medicare patients with a complication produced a 190% higher margin. The findings mean that, for hospital managers, efforts to reduce surgical complications could result in substantially worsened financial performance.

The study appears in the April 17, 2013 issue of the Journal of the American Medical Association (JAMA).

“We found clear evidence that reducing harm and improving quality is perversely penalized in our current health care system,” said Sunil Eappen, the lead author and chief medical officer of Massachusetts Eye and Ear Infirmary.

“It’s been known that hospitals are not rewarded for quality. But it hadn’t been recognized exactly how much more money they make when harm is done,” said senior author Atul Gawande, director of Ariadne Labs, professor in the Department of Health Policy and Management at HSPH and a surgeon at BWH.