When Your Surgery Goes Wrong, Hospitals Profit

Photo Credit: Washington Post

For a patient, a surgical complication can be a painful, even deadly. For a hospital, a surgical complication can be incredibly profitable.

A surgical complication increases a procedure’s average contribution margin by 330 percent for the privately insured and 190 percent for Medicare patients, according to a study published this week in the Journal of the American Medical Association.

The study underscores how ludicrous the incentives are in the American health care system, generally paying doctors for each medical service they provide, even if some of that care is the result of a surgery gone wrong.

“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 does not imply that hospitals intentionally complicate surgeries to bring in more revenue. Most surgeries, about 95 percent, go off without a hitch. What it does suggest to the surgeon, writer and Harvard professor Atul Gawande is that hospitals now see little reason to invest in technologies that would reduce complications when the only prize at the end would be lower income.