Relationship between occurrence of surgical complications and hospital finances

Abstract

Importance: The effect of surgical complications on hospital finances is unclear.

Objective: To determine the relationship between major surgical complications and per-encounter hospital costs and revenues by payer type.

Design, setting, and participants: Retrospective analysis of administrative data for all inpatient surgical discharges during 2010 from a nonprofit 12-hospital system in the southern United States. Discharges were categorized by principal procedure and occurrence of 1 or more postsurgical complications, using International Classification of Diseases, Ninth Revision, diagnosis and procedure codes. Nine common surgical procedures and 10 major complications across 4 payer types were analyzed. Hospital costs and revenue at discharge were obtained from hospital accounting systems and classified by payer type.

Main outcomes and measures: Hospital costs, revenues, and contribution margin (defined as revenue minus variable expenses) were compared for patients with and without surgical complications according to payer type.

Results: Of 34,256 surgical discharges, 1820 patients (5.3%; 95% CI, 4.4%-6.4%) experienced 1 or more postsurgical complications. Compared with absence of complications, complications were associated with a $39,017 (95% CI, $20,069-$50,394; P < .001) higher contribution margin per patient with private insurance ($55,953 vs $16,936) and a $1749 (95% CI, $976-$3287; P < .001) higher contribution margin per patient with Medicare ($3629 vs $1880). For this hospital system in which private insurers covered 40% of patients (13,544), Medicare covered 45% (15,406), Medicaid covered 4% (1336), and self-payment covered 6% (2202), occurrence of complications was associated with an $8084 (95% CI, $4903-$9740; P < .001) higher contribution margin per patient ($15,726 vs $7642) and with a $7435 lower per-patient total margin (95% CI, $5103-$10,507; P < .001) ($1013 vs -$6422).

Conclusions and relevance: In this hospital system, the occurrence of postsurgical complications was associated with a higher per-encounter hospital contribution margin for patients covered by Medicare and private insurance but a lower one for patients covered by Medicaid and who self-paid. Depending on payer mix, many hospitals have the potential for adverse near-term financial consequences for decreasing postsurgical complications.