Balancing act: Improving clinical care and the bottom line

To reduce or not reduce surgical complications, that is the question. And it seems like the answer should be a resounding "yes." But as FierceHealthcare reported yesterday, programs to reduce surgical complications hurt hospitals' cash flow.

An article in this month's Health Affairs found that a hospital loses about $1.2 million in annual reimbursement revenue for each 1 percent drop in the complication rate. One reason for the financial setback is that fewer complications usually come with shorter lengths of stay and more "empty" beds.

This puts hospitals in a tough spot, constrained by lower reimbursements and revenues, but pressured to improve patient safety and care quality. The industry could certainly use more surgery safety efforts, given that almost one in 10 general surgery patients return to the hospital with postoperative complications.

The researchers called the findings "distressing," as it pits the best financial interests of hospitals against the best interest of patients. They also reinforce the notion of the "savings illusion," wherein efforts to improve clinical quality don't generate any cost savings, according to a December 2011 study in the New England Journal of Medicine.

The Health Affairs article suggests the shift to value-based care won't be an easy one. With value-based purchasing, public reporting encourages hospitals to improve their performance, and as the Health Affairs article noted, surgical complication rates are an important factor in determining which hospitals perform well and which ones don't. Yet lowering those rates won't realize the savings that hospitals need to survive. The matter is even more complicated for small, rural or independent hospitals already struggling with declining profits and Medicaid cuts.

Moreover, healthcare leaders continue to fall for the "savings illusion." In fact, more than 70 percent of healthcare CEOs believe improving clinical operations and care delivery performance are the biggest opportunities to save money within their organizations, according to a new poll from consulting group Huron Healthcare. However, the research shows clinical quality improvements rarely lead to bottom-line savings.

Still, the Health Affairs article acknowledges some hospitals may still implement surgical complication-reduction programs because they think it's "the right step to take."

To make up for potential losses and really incentivize surgery safety, the authors recommend hospitals establish shared-savings programs with payers. Such a payment model would allow hospitals to support what's best for their patients, as well as their bottom lines.

While's there's no clear answer, new pay and care delivery models can help hospitals decide. - Alicia (@FierceHealth)