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Hospital profitability affects patient care, study finds
Scripps Howard News Service


June 07, 2005

Did the hospital where you're having that operation next week turn a profit last year? If not, the odds are higher that the medical staff will make a significant mistake during or after your surgery, according to a study published Tuesday.

Researchers from the U.S. Agency for Healthcare Research and Quality reviewed medical errors in the files of about 1 million patients who underwent major surgery in 176 Florida hospitals between 1996 and 2000.

A new study of adult surgical patients in Florida hospitals shows those getting operations in hospitals that take the biggest hits in operating profit margins face a significantly higher risk of medical errors during and after surgery.

"Employers who purchase health benefits for their workers should certainly check out the profitability status of the hospitals they're sending their people to in light of these findings." - William Encinosa, lead author of a study on hospital finances and patient safety outcomes.

They found that over time, a decrease in a hospital's financial profit margin leads to a higher risk for mistakes in the treatment of adult surgical patients.

"These results suggest that financial pressures limit a hospital's ability to make costly investments in patient safety improvements and lead to a safety culture problem across the hospital," write economists William Encinosa and Didem Bernard in the spring issue of Inquiry, a quarterly journal on health care organization and financing.

The researchers looked at the financial performance of hospitals in the year before they considered surgical or nursing errors because they reasoned that impacts on patient care would most likely be felt in the following year.

About 25 percent of all surgeries in Florida during the five-year period took place in financially struggling hospitals with an average annual operating profit loss of 10 percent; another 25 percent of surgeries took place in hospitals that enjoyed average operating profit gains of 15 percent.

Patients who had surgery in the bottom-tiered hospitals were:

- Nearly 6 percent more likely to have a medical error occur during the procedure, such as having an instrument left in the body, a reaction to a blood transfusion or complications from anesthesia;

- Almost 15 percent more likely to have a post-surgical medical error, such as the development of bedsores or hip fractures from a fall in the hospital;

- About 12 percent more likely to experience any of 24 preventable patient safety events arising from surgery, nursing care or problems such as nerve compression injuries or the re-opening of a surgical site.

Encinosa said that by looking at changes in finances and error rates reported for each hospital over five years, the study captured the effects of operating profit changes regardless of what other changes might have been taking place at a particular hospital.

The researchers said they're not sure why the negative effects of financial performance showed up more prominently for nursing performance, "but it could be that nursing ratios per patient get cut a lot quicker and more severely while the surgical suites are a bit more insulated from those changes," Encinosa said. "Still, the financial pressures seem to take a toll on the culture of safety across the board."

All Florida hospitals were squeezed to some extent during the late '90s, the researchers said, as the share of patients enrolled in managed care plans rose from 12 percent to 27 percent and payments from those plans were discounted by an average of 40 percent. Also, payments to hospitals were reduced from Medicare and the proportion of uninsured patients rose.

"But the gap between the rich and the poor hospitals grew, and erosion in patient safety was more pronounced for those toward the lower end of operating profits," Encinosa said.

While it may be difficult for patients to consider a hospital's financial performance, "employers who purchase health benefits for their workers should certainly check out the profitability status of the hospitals they're sending their people to in light of these findings," Encinosa said.

"Our results suggest that any cost-cutting efforts by hospitals should be carefully designed and managed with respect to patient safety."


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Contact Lee Bowman at BowmanL(at)
Distributed by Scripps Howard News Service,

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