The Costs and Dynamics of Surgical Morbidity and Mortality

The implementation of prospective payment systems for hospitals, most notably the Medicare diagnosis-related group (DRG) mechanism, will encourage surgeons and hospitals to characterize populations that create financial risk. Our previous studies have demonstrated that certain factors (identifiers) such as emergency admission or necessity for blood transfusion would predict higher cost patients per DRG and that some populations (i.e., surgical intensive care unit admissions) would generate significant financial risk under DRG reimbursement. The purpose of this project was to test the assumption that surgical complications and deaths would generate financial risk under DRGs and that the degree of risk would vary by the dynamics of the complications and death. We examined all surgical admissions (n = 5596) to a large voluntary teaching hospital to determine all general and vascular surgical complications and deaths (170 admissions; complication rate 3.1%) for 1983 and 1984. Total charges (exclusive of physicians' fees) of these patients were $4,683,670 (mean per patient, $27,551) versus DRG revenues of $2,378,703 (mean per patient, $13,992) resulting in a loss of $2,304,967 (mean per patient, $13,558). Charges and financial risk generated by the origin of the surgical morbidity and death differed as follows: iatrogenic origin only (N = 41)--mean charge per patient, $15,321 (19.5% of whom had unusually long hospital stays or unusually high costs [outliers]; origin intrinsic to the patient's disease only (N = 75)--mean charge per patient, $28,391 (38.7% outliers); and combined iatrogenic origin and patient's disease (N = 54)--mean charge per patient, $35,669 (48.0% outliers) (group 1 versus groups 2 and/or 3; p less than 0.001).(ABSTRACT TRUNCATED AT 250 WORDS)