Hospital revenue takes a hit with surgical safety efforts

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Although eliminating surgical complications means better patient safety and care quality, lower complication rates hurt hospitals' cash flow, according to an article in this month's Health Affairs.

Researchers found that a hospital is reimbursed about $36,000 for a patient with surgical complications, compared with only $24,000 for a patient without complications. Moreover, the hospital loses about $1.2 million in annual reimbursement revenue for each 1 percent drop in the complication rate, according to the article.

The article pointed out that for hospitals where surgical inpatient volume is not growing, programs to reduce surgical complications create negative cash flow, as fewer complications also can cut lengths of stay and revenues.

Therefore, researchers recommend hospitals with "limited growth prospects" form a gain-sharing arrangement with payers so they share in any savings from surgical complication reduction programs, noted a related Health Affairs blog post.

Despite potential revenue losses, hospitals may still establish surgical complication reduction programs because they think it's "the right step to take," the article stated.

However, for hospitals with growing surgical volumes, such programs may lead to positive cash flow. That's because reducing complications increases capacity, and hospitals growing fast enough can fill the empty beds with more surgical patients, the blog post noted.

That could be good news for hospitals' bottom lines, as nearly half (49 percent) of hospital executives reported their operating room case volume increased in the past year, while 73 percent expect it to grow during the next three years, according to an August survey from software firm Surgical Information Systems.

For more:
- read the Health Affairs article
- here's the Health Affairs blog post

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