Observation Deck: To Err is Human – and Costly

It came as no surprise when the Centers for Medicare and Medicaid Services announced in August that the feds would no longer reimburse hospitals for certain hospital-acquired infections and mistakes that they make. Where CMS goes, expect other payers to follow.

Specifically, CMS said that beginning in October 2008, it will stop paying for two hospital-acquired infections (catheter-associated urinary tract infections and Staphylococcus aureus septicemia), pressure ulcers, and three events that the feds believe should never occur — air embolism, blood incompatibility and objects left behind in surgical patients. The government is considering broadening the “no-pay” rule to other conditions, including ventilator-associated pneumonia and surgical site infections.

The rationale is simple: Just as consumers expect car dealers and appliance repair companies to pay for the mistakes they make when fixing a car or dryer, so too does the government expect hospitals to pay for their own mistakes. After all, why should the feds pay for an extended length of stay due to a hospital-acquired infection or pressure ulcer?

According to CMS, in fiscal year 2006, there were 11,780 reported cases of Medicare patients who had a catheter-associated urinary tract infection as a secondary diagnosis, with an average charge of $40,347 for the entire hospital stay. In that same year, there were 322,946 reported cases of Medicare patients who had pressure ulcers as a secondary diagnosis; the average charge for those hospital stays was $40,381.

How far we’ve come since November 1999, when the Institute of Medicine published its report “To Err is Human,” which estimated that between 44,000 and 98,000 people die in U.S. hospitals each year as a result of medical errors that could have been prevented. Before that report, few people even admitted that mistakes occurred in hospitals. Today, payers — including the government — are demanding financial accountability for them.

No doubt implementation of the Medicare rule will be bumpy. It’s not clear, for example, how the government will determine whether an infection or pressure ulcer developed after the patient was admitted rather than before it. These messy details will have to be worked out. Understandably, hospitals fear they will have to make investments in technology and labor in order to perform more thorough screenings of patients who come in through their doors.

The new regulation spells all kinds of trouble for facilities with high rates of infection, pressure ulcers or mistakes. Contrary to what some believe, such facilities are already losing money by practicing poor medicine. A study by the Association for Professionals in Infection Control and Epidemiology (APIC), called “Dispelling the Myths: The True Cost of Healthcare-Associated Infections,” showed that hospitals lose money on infections and rework — not to mention the human suffering they cause. APIC cites a study of 1.69 million admissions from 77 American hospitals showing that inpatients with infections actually reduced net margins by $286 million. One facility reduced costs by $1.8 million after launching an all-out assault on hospital-acquired infections. So, practicing good medicine appears to make economic sense as well. Now, poor performers will no longer collect payments on their outlier patients, that is, those whose lengths-of-stay are excessive due to hospital-acquired infections, etc.

The long-term solution to hospital-acquired infections and mistakes rests not just with product changes, but process improvement, says Susan DeVore, COO, Premier Inc. At its recent “Breakthroughs” Conference, Premier launched its QUEST program (an acronym standing for Quality, Efficiency and Safety, with Transparency), which will employ automated surveillance tools and clinical data-mining tools to explore ways to improve providers’ track records on safety and care. (See July/August 2007 Journal of Healthcare Contracting.)

Benchmarking tools can help IDNs compare their performance with that of others of similar size and patient mix. Investment in automated, real-time, healthcare-acquired infection surveillance tools, which allow the medical staff to quickly identify problems and systematically address them, can also lead to solutions. Also needed are improved systems in the OR to prevent mistakes, such as sponges left in the patient after surgery; and better surveillance systems on the med/surg floors, to reduce the chances of patients falling and hurting themselves. The challenge, says DeVore, is to invest in such systems now, before the regulations hit full force.

JHC readers will no doubt become involved in discussions about hospital-acquired infections and ways to reduce or eliminate them. They also should brace themselves for some clamor from medical device makers, as they trumpet the ability of their products to stem infection or other adverse events. Will you be able to cut through the noise? You’ll have to.

Yes, implementation of the Medicare rule will be messy and controversial. But it’s a step in the right direction. It ups the ante for providers to improve patient care. It will hasten the implementation of better systems. And, as Stephanie Alexander, senior vice president of Premier Healthcare Informatics, points out, it may bring hospitals and their communities closer together. After all, infections that arise in nursing homes, prisons, schools and other community-based institutions find their way into hospitals, and vice versa. It’s a communitywide problem and must be addressed on that basis. So let the discussions begin.

About the Author

Mark Thill

Mark Thill is the Editor of The Journal of Healthcare Contracting and has been reporting on healthcare supply chain issues since 1985. He is a graduate of Dominican University in River Forest, Ill., and he received a master’s degree in journalism from Northwestern University in Evanston, Ill.