MRSA: Your Cost Problem

Philip Betbeze, for HealthLeaders Media, October 13, 2008

Chief financial officers are becoming well-versed in the problem of methicillin-resistant staphylococcus aureus in hospitals. Who'd have thunk it?

It's because MRSA now affects the bottom line. Of course, no hospital wants to be responsible for making a patient sicker than when they came in to get treated. But it happens, and until recently it was a clinical problem. But now, thanks to Medicare's "never events" list and other insurers' focus on quality, it's a cost problem. And MRSA isn't your only cost problem when it comes to infections and other conditions that crop up in the hospital.

It's no secret that CMS and other insurers have stepped up the pressure on hospitals to avoid so-called "never events" and otherwise improve quality. That pressure, at least this year, comes in the form of nonpayment to the hospital should a patient acquire one of eight conditions while in the hospital. CMS has a list of several more for 2009.

Oh, and one more thing: Hospitals won't get paid at the highest Medicare rate if they don't participate on the hospital quality measure reporting program.

This new focus on accountability is prompting hospital CFOs and others in the finance department to get a crash course in quality. These decrees by CMS on cost and quality are forcing important conversations about how to prevent patients from getting sicker in the hospital than they were before they arrived. How should we do it? Could we test for MRSA internally so we can document whether the patient carried the bacteria before admission? Should we outsource that testing so that it's more reliable and cost-effective?

Dennis Grimaud, CEO of Diatherix Laboratories Inc., has his own opinion about the subject, because he runs a company that does outsourced testing of patients for the MRSA bacteria. But he says he's having more discussions with hospital financial people involved than ever, whereas in the past, he might have only met with clinicians.

"Does the hospital want to make an investment in equipment, personnel, and products?" he asks rhetorically. "Investment in equipment and personnel is very costly."

And there it is.

Though some conspiracy theorists surmise that the Medicare quality reporting program and the associated "never events" are an unsubtle way for CMS to cut its gargantuan costs and has little to do with a focus on quality, one unintended consequence could actually be a good thing. Ever since I started covering healthcare, the people who work in the sector have complained vociferously about the "silos" that exist in the business.

Here are just a couple of the myths associated with silos that I've heard over the years:

  • Doctors don't know how their decisions affect hospital finances, nor do they care.
  • Hospital financial people don't care about anything but the bottom line, nor do they care much about clinical quality.

Of course, neither of these statements is true. No one wants to give substandard care, and doctors likely don't want to bankrupt the hospital in which they practice. But perhaps the best thing about CMS and insurers' new focus on quality is the conversations they're encouraging among departments that once never talked to each other, but just grumbled about how decisions in each camp negatively affected the others.

And that's something to build on.

Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at

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