Relationship Between Occurrence of Surgical Complications and Hospital Finances

IMPORTANCE: The effect of surgical complications on hospital finances is unclear. OBJECTIVE: To determine the relationship between major surgical complications and per-encounter hospital costs and revenues by payer type. DESIGN, SETTING, AND PARTICIPANTS: Retrospective analysis of administrative data for all inpatient surgical discharges during 2010 from a nonprofit 12-hospital system in the southern United States. Discharges were categorized by principal procedure and occurrence of 1 or more postsurgical complications, using International Classification of Diseases, Ninth Revision, diagnosis and procedure codes. Nine common surgical procedures and 10 major complications across 4 payer types were analyzed. Hospital costs and revenue at discharge were obtained from hospital accounting systems and classified by payer type. MAIN OUTCOMES AND MEASURES: Hospital costs, revenues, and contribution margin (defined as revenue minus variable expenses) were compared for patients with and without surgical complications according to payer type. RESULTS: Of 34, 256 surgical discharges, 1820 patients (5. 3%; 95% CI, 4. 4%-6. 4%) experienced 1 or more postsurgical complications. Compared with absence of complications, complications were associated with a 39, 017 (95% CI, 20, 069-50, 394; P <. 001) higher contribution margin per patient with private insurance (55, 953 vs 16, 936) and a 1749 (95% CI, 976-3287; P <. 001) higher contribution margin per patient with Medicare (3629 vs 1880). For this hospital system in which private insurers covered 40% of patients (13, 544), Medicare covered 45% (15, 406), Medicaid covered 4% (1336), and self-payment covered 6% (2202), occurrence of complications was associated with an 8084 (95% CI, 4903-9740; P <. 001) higher contribution margin per patient (15, 726 vs 7642) and with a 7435 lower per-patient total margin (95% CI, 5103-10, 507; P <. 001) (1013 vs -6422). CONCLUSIONS AND RELEVANCE: In this hospital system, the occurrence of postsurgical complications was associated with a higher per-encounter hospital contribution margin for patients covered by Medicare and private insurance but a lower one for patients covered by Medicaid and who self-paid. Depending on payer mix, many hospitals have the potential for adverse near-term financial consequences for decreasing postsurgical complications.