Surgery Complications Increase Hospital Profits: Study

What is a patient's nightmare may be a hospital's gain. A new study reports that hospitals often make more profit when a surgery goes wrong, than when it goes according to plan.

The  study  published in The Journal of the American Medical Association found that a surgical complication increases a procedure's average contribution margin by 330 percent for the privately insured and 190 percent for Medicare patients.

A patient will typically end up spending 14 days in the hospital instead of three. If you have private insurance, the hospital makes $39,017 more in profit-$55,953 versus $16,936. If you have Medicare, the hospital makes just$1,749 more.

"If you personalize this and a relative is having heart surgery, which gets complicated by pneumonia, I don't think we would want a hospital's profit to go up as a result of that pneumonia," said study co-author Barry Rosenberg, a partner in Boston Consulting Group's health care practice.

The study brings light to the hidden incentives in the health care system which generally paying doctors for each medical service they provide, even if some of that care is the result of a surgery gone wrong.

The study looked at data of more than 34,000 surgical discharges, and researchers focused on 10 severe and potentially preventable complications such as surgical site infections, deep vein thrombosis, and sepsis. A total of 1,820 patients had such complications.

Among other co-authors is Atul Gawande, the noted Harvard professor, surgeon and frequent contributor toThe New Yorker magazine.

"Part of what we have been trying to unravel is why some of the simple quality control measures that we know work are very slow to penetrate," Gawande told the Washington Post. "This puts in perspective how weak the incentives are [to improve quality]. Complications produced massively higher profits."