Healthcare News & Insights

Reducing surgical complications may lower hospitals’ revenue

Hospitals that strive to meet various post-surgical quality measures may face a significant loss in revenue, one study finds.

An analysis from Health Affairs found that, under current reimbursement rules, a hospital stands to lose $1.2 million dollars in yearly revenue from reimbursement for each 1% drop in the patient complication rate.

Given that reducing patient complications has been mandated by the Centers for Medicare & Medicaid Services (CMS), most hospitals will likely have to deal with this reality.

How hospitals should cope

To mitigate some of the financial drawbacks, the report suggests hospitals consider increasing their surgical caseloads. If hospitals were able to bring in more patients, the impact that reducing complications would have on their revenue would be less severe.

In an interesting twist, the study also implies that lowering complication rates may actually help bring more patients into high-performing hospitals.

With the push toward reducing costs and improving outcomes in health care, more patients will likely be encouraged to visit hospitals with lower complication rates, leading to high rates of growth in hospitals committed to improving their performance.

Taking advantage of this accelerated growth is key to offsetting the revenue losses associated with reducing complication rates.

What to consider

Before taking on higher caseloads, however, hospital execs need to examine whether their facilities can handle more patients in the first place.

It’s crucial to perform a thorough analysis to determine whether the hospital can still perform to the same standard of care while taking in more patients. After all, if your hospital depends on its reputation for providing high-quality care to attract patients and increase revenue, it must maintain that standard if it wishes to stay competitive.

Another important factor is the costs/benefits analysis of taking on more patients at your hospital.  Take a thorough look at the extra costs that could be incurred when taking on more patients, which could include paying extra staff to handle the influx of patients and purchasing more surgical equipment.

Work with payors

If increasing your caseload isn’t an option at your hospital, or the drawbacks outweigh the benefits, the report presents another suggestion: Enter into gain-sharing agreements with payors.

That way, your hospital will be able to receive a portion of the money saved through reducing surgical complications, and the financial impact won’t be quite as difficult to stomach.

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