Study: Hospitals Lack Financial Incentive to Improve Safety

eAlert 7bca928d-87e5-499a-a77b-6932ca390cad

<p>Medical errors cost the health system billions of dollars a year. Patient safety advocates have long sought to demonstrate that if health care organizations invest in safer practices and systems, they will reap financial returns in the form of reduced malpractice costs and other expenses.<br><br>But according to Harvard University researcher Michelle M. Mello, Ph.D., J.D., and her colleagues, hospitals may lack the financial incentives needed to improve safety. In their article, "<a href="/publications/in-the-literature/2008/apr/who-pays-for-medical-errors---an-analysis-of-adverse-event-costs--the-medical-liability-system--and
">Who Pays for Medical Errors? An Analysis of Adverse Event Costs, the Medical Liability System, and Incentives for Patient Safety Improvement</a>" (<em>Journal of Empirical Legal Studies</em>), they found that most of the costs resulting from medical errors are actually shifted to outside parties--often to payers like Medicare.<br><br>Mello and colleagues compared the costs associated with adverse events that were absorbed by hospitals, including malpractice insurance premiums and extra inpatient care they were unable to recoup, against costs that were passed along to other payers. On average, the hospitals studied externalized 78 percent of the costs of all injuries and 70 percent of the costs of negligent injuries.<br><br>The authors say that in addition to changes in provider payment policy, legal reforms to allow more injured parties to pursue compensation could bolster incentives for hospitals to improve safety. Today, only a small percentage of patients affected by medical errors actually receive compensation through the medical liability system.<br><br>In a previous Fund-supported <a href="/publications/in-the-literature/2007/feb/health-courts--and-accountability-for-patient-safety
">study</a>, Mello and colleagues suggest creating an administrative compensation system of "health courts," which would make compensation accessible to a broader range of patients and help control malpractice costs by setting reasonable limits to awards.<br><br><em>Please take advantage of our new commenting feature by clicking on the "Post a Comment" button on the publication page.</em></p>