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Hospitals Profit On Bloodstream Infections

Cheryl Clark, for HealthLeaders Media, May 23, 2013

Additionally, the difference in margin, or profit for the hospital after expenses to care for these patients, was "enormous," Pronovost says. The average profit when all payers were combined was $54,906 when the patient had an infection versus $6,506 when the patient did not.

When the government alone was the payer, paying, the hospital did not profit.

"We saw that hospitals profit substantially when an insured patient has a preventable infection," Pronovost says. "But more important—and we had no idea it was this much—it's the insurers, not the government, that foot the largest bill."

Outliers trigger "windfall" profits
Most care reimbursement to hospitals is based on the nation's diagnosis-related group (DRG) payment structure or network negotiated charge for insurance plans, which groups patients by their condition based on a presumption of the typical care they'd need, such as length of stay, regardless of whether the patient is harmed or infected in the process.

But the DRG system flies out the window in virtually all CLABSI cases because these extremely sick patients are considered "outliers." That is, they have such long lengths of stay—in this study up to 24 days— that the normal DRG or network negotiated charges no longer apply. Instead, the hospitals' regular fee-for-service charges kick in.

"Hospitals then get paid essentially based on how much they bill," Pronovost explains. "This is a system that was designed at a time when we didn't really think about preventable harm. We said to hospitals, 'Oh well, if you have a patient complication requiring longer length of stay, you, the hospital, shouldn't be at risk, and you ought to be compensated.'

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