Sunday, September 8, 2013

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.