Skip to main content

Medical Errors Earn Hospitals Money - Who Knew?

Though I have been accused by various commenters as protecting my own specialty when I point out excesses, flaws and conflicts of interest in the medical profession, this accusation would be handily dismantled after a fair reading of prior posts.  Indeed, my own specialty of gastroenterology and my own medical practice has felt the effects of the honed Whistleblower scalpel.   If an individual or an institution will not willingly engage in self-criticism, then it creates a credibility gap that may be impossible to bridge.  If you want a seat at the table, then arrive exposed and humble.

My Preferred Instruments

A study was published in the prestigious medical journal JAMA, the Journal of the American Medical Association in April 2013 publishing what we have known for decades: hospitals make more money when medical errors are committed.   As an aside, I have much more respect for JAMA than I do for the AMA, but I’ll resist the strong temptation to digress.

Here’s how it has worked in the past.  If a patient is hospitalized with an inflamed gallbladder and is discharged a day later after surgery, the hospital would be reimbursed according to a specific fee schedule.   (Payment systems for hospitalized patients are more complex than this, but accept the above example for the moment.)  If this same patient undergoes complications after surgical removal of the gallbladder, the hospital would be paid more.   If an infection at the incision site, or the patient develops a reaction to medication that may lead to more testing, then the hospital bill will understandably increase.  The issue is if hospitals or physicians should be able to charge more for extra care that was preventable.
There is an inexorable movement away from fee-for-service medicine which antagonists argue lead directly to excessive care.  Value based care is the new concept where quality, not quantity, will be measured and reimbursed.    There is a growing Never Events list where certain medical complications that are designated as events that should never happen, will never be reimbursed.   While this concept sounds attractive in a sound bite, my view on Never Events is more nuanced.

The argument to withhold payment for care that resulted from medical error is potent.   Keep in mind that defining a medical error is not as easy as it sounds.  One can easily imagine how easy it would be to confuse a medical complication, which is a blameless event, from an error or a negligent act.   If I perform a colonoscopy and a perforation develops as a complication, should the hospital and surgeon I consult not be paid for the additional care that would be required?

Would every profession consent to returning fees for mistaken advice or service?  Do you agree with the following?
  • Financial advisors should return fees if investment performance is below a designated threshold or differs from their peers.
  • Attorneys who have been found on appeal to have offered ineffective legal arguments at trial, should surrender their fees.
  • A professional baseball player who drops a fly ball should lose a day’s pay.
  • A newspaper publisher should offer a rebate to all readers if a news story is found to be inaccurate owing to a lack of proper editorial oversight. 

I realize that medical mistakes cost money, as do some of the hypothetical examples above.   I also accept that financial incentives can change behavior and can be an effective tool.    But every human endeavor has a finite error rate and we should be cautious before using a financial drone attack against only the medical profession.  Let’s use a scalpel here and not a sledge hammer.  And those of you outside of medicine, explain why your occupation should be spared from this reform strategy?

If to err is human, and doctors are human, then should we punished for our humanity?


  1. Since I have some experience with the question of who pays for mistakes, I'll put in my 2 cents.

    During my engineering career I've works both as an employee working on in house products, for consulting companies working on customers products, and as an independent working for a number of clients. And I've dealt with suppliers, service providers, consultants and other riff-raff.

    The question really is, who is taking the risk. Currently I'm on a W2 working on an in house product. So the answer is, my employer eats my mistakes.

    When I was a consultant doing a number of small jobs, I ate any largish screw ups. And while ultimately my customers paid, the place where is showed up was in that months cash flow.

    My take is a hospital or doctor is in the business of 'a bunch of small jobs' for a large number of clients (patients). The incentives work better when the screw up end up pairing down the cash flow/profit column not increasing it.

    Also, making a particular patient who is a isolated victim of a medical error bear the cost burden alone while everyone else runs away Scott free, that's essentially immoral.

  2. Appreciate your comment. Agree that holding a patient financially responsible for a medical error is wrong.

  3. Today all the doctors earn lots of money and for this they can charge lots of money for their patient and if you want to save your shelf from this type of loss than you can easily start your own medical practice...
    source:how to start a medical practice

  4. I did not, but I do now. That E.D. error and our loss continues to hurt and haunt me and my family.


Post a Comment

Popular posts from this blog

Why Most Doctors Choose Employment

Increasingly, physicians today are employed and most of them willingly so.  The advantages of this employment model, which I will highlight below, appeal to the current and emerging generations of physicians and medical professionals.  In addition, the alternatives to direct employment are scarce, although they do exist.  Private practice gastroenterology practices in Cleveland, for example, are increasingly rare sightings.  Another practice model is gaining ground rapidly on the medical landscape.   Private equity (PE) firms have   been purchasing medical practices who are in need of capital and management oversight.   PE can provide services efficiently as they may be serving multiple practices and have economies of scale.   While these physicians technically have authority over all medical decisions, the PE partners can exert behavioral influences on physicians which can be ethically problematic. For example, if the PE folks reduce non-medical overhead, this may very directly affe

Why This Doctor Gave Up Telemedicine

During the pandemic, I engaged in telemedicine with my patients out of necessity.  This platform was already destined to become part of the medical landscape even prior to the pandemic.  COVID-19 accelerated the process.  The appeal is obvious.  Patients can have medical visits from their own homes without driving to the office, parking, checking in, finding their way to the office, biding time in the waiting room and then driving out afterwards.  And patients could consult physicians from far distances, even across state lines.  Most of the time invested in traditional office visits occurs before and after the actual visits.  So much time wasted! Indeed, telemedicine has answered the prayers of time management enthusiasts. At first, I was also intoxicated treating patients via cyberspace, or telemedically, if I may invent a term.   I could comfortably sink into my own couch in sweatpants as I guided patients through the heartbreak of hemorrhoids and the distress of diarrhea.   Clear

Solutions for Medical Burnout

Over the past few months, I’ve written enough posts on Medical Burnout that I have created a new category to house them.  Readers will find there posts detailing the causes and consequences of burnout in the medical profession. The profession has been long on the causes but short on solutions.   What must be done to loosen the burnout shackles from medical professionals? It will be a huge undertaking for caregivers and society at large to turn this ocean liner around.  And it will take time.  The first step must be to obtain a commitment to the overall mission from as many constituents as possible.   Support will be needed from medical professionals, hospital leadership and administrators, physician employers, insurance companies and the public.   As with many reform efforts, many of the players must be willing to sacrifice some of their own interests in order to server the greater good – a worthy and rare event.   Without adequate buy-in from stakeholders, the effort will never ge