The association between hospital finances and complications after complex abdominal surgery

Knechtle, W.S., Perez, S.D., Medbery, R. L., & et al. (2015, Aug). The association between hospital finances and complications after complex abdominal surgery. Annals of Surgery, 262(2), 273-279.

  1. Examination of deficiencies in healthcare reimbursement system

In the U.S healthcare reimbursement system, the costs of getting medical care inflate each year. Despite the efforts made to improve quality and costs in health care, the need for affordable care for the American people is a necessity. The Former President of U.S, Barrack Obama implemented the Affordable Care Act with expectations to reduce the cost of health care which summed up to 17.9% of the Gross Domestic Product as in 2011. The postsurgical complications and readmission a month after discharge have raised issues in the deficiencies of the health care system. The postsurgical complications increase costs of medical care by 1.89 times thus increment in a patient’s total cost. Medical errors in the system are causing patients much regarding the medical expenditures. In recent statistics, hospitals have tremendously improved in reducing the number of readmissions and reduced complications postsurgical complications. The system however still reflects deficiencies regarding the costs. The financial metrics used in the healthcare system reveals that only 5% of the costs are due to readmissions or postsurgical complications (Knetchtle, Perez & Medbery, 2015).

  1. Analysis of the financial metrics used in the healthcare system

Patients’ demographic features are used to calculate the estimated cost of receiving medical care. The conditions researched in the article are hepatectomies, colectomies and Whipple’s analyzed depending on the procedures associated with each. Within the financial metrics analyzed, there are several inclusions made while calculating the total costs and the charges gained by the hospital. The total cost is calculated using the DRG measure where any related readmission costs and other supplementary costs are incurred in the process of compensating for the hospital overhead costs. The contribution margin is then determined through first paying for the hospital fixed costs. EPSI cost accounting system perfectly defines the roles of each element in the calculation cost of patients Medicare especially those with readmission cases and postsurgical complications. The Affordable Care Act has some consequences on the financial status of hospitals as they incur additional costs on the patients who pay less than the actual costs they create in the hospital setting (Knetchtle, Perez & Medbery, 2015).

  1. Hospitals reactions to payments

The efforts of the government to reduce the level of costs through readmission and after-surgery complications affect the hospitals’ financial status. Patients with high risks pay higher costs due to the high probability of readmissions and postsurgical complications. Complications are independently associated with increased costs thus payments restructuring must match the episode’s total cost. If the payments for Medicare and Medicaid Services are reduced, the hospitals are forced to examine the proportions of patients with surgical complications affects their patient flow and profits. To compensate for the reduced payments the hospitals give high payment penalties if the bundled payments are not included for a planned readmissions. Risk-averse behaviors by patients in cases of medical errors are prevented by hospitals by incurring the additional costs and getting reimbursed accordingly by the relevant authorities. The financial incentives will shift as payers become reluctant to offer reimbursements. The health care system, therefore, depends on the efficiency of reimbursement (Knetchtle, Perez & Medbery, 2015).

  1. Analysis of changes in the payment schedules

Health care systems have advanced in various dimensions with an attempt to improve the overall health care sector in the U.S and across the globe. Nursing department forms a major part of the health care, and several types of research have been conducted aiming to improve the systems. The article focus on the additional costs resulting from readmission of patients and postsurgical complications. The effective way advocated in the article is to alter the contributions of the parties financing hospitals. Contribution margin after estimation of the total cost of readmission patients and postsurgical patients must at least gain some profits to the hospital. Investment venturing and financial stability of the health care system is essential to strengthen the entire system (Knetchtle, Perez & Medbery, 2015).