Hospitals Will Have to Pay for Mistakes

Vanessa Fuhrmans of the Wall Street Journal reports that insurance companies are probably going to stop paying for medical treatments made necessary by “never-events,” (list from the National Quality Forum) those major screw-ups you pray a hospital never commits.  Examples include leaving a sponge in a surgery patient, amputating the wrong limb, transfusing the wrong blood type, etc.  Participating insurers are following Medicare’s lead, and not allowing themselves, or patients to be billed for errors that should, under no circumstances, occur.  Some of these insurers are WellPoint, Aetna, Cigna, UnitedHealthcare, and Humana.

The purpose is to incent hospitals to prevent these mistakes in the first place, which cost billions a year to insurers, hospitals and patients alike.  Laissezfairehealthcare is in favor of this.  Eventually more preventable errors that aren’t necessarily never-events, will become never-events as hospitals become safer and less accident-prone.  While hospitals could spend money trying to skirt around these new restrictions, or attempt to pass the cost through to the insurers and patients another way, many will discover simple updates in policies and procedures, personel changes, or technological investments will more than pay for themselves in improved patient outcomes.

Smart hospital administrators are already seeing the light: “[t]o lower its rate of infection…Pitt County Memorial Hospital in Greenville, N.C., in February expanded its screening for methicillin-resistant staph infections to all patients coming into the hospital. By identifying and isolating those with the strain early, it lowered the number of MRSA pneumonia cases related to ventilator use by 67% and MRSA urinary-tract infections by 60% within eight months. In all, the expanded screening has cost nearly $1 million, $800,000 picked up by private and public insurers.  Steve Lawler, the hospital’s president, says it has more than recouped its $200,000 investment. Moreover, spending the money to make the hospital safer is a “better return on investment…than some billboard campaign,” he says.”

For another viewpoint – visit to the Verden Group’s blog.

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Smarter Germs Breed Smarter Drugs: Markets in Action

People have criticized drug companies lately for spending billions on non-necessary drugs like Propecia and Viagra – the balding pill and the boner pill, respectively…and not focusing on an aging family of antibiotics. Drug companies continue to develop and sell antibiotics, which have thin profit margins, but most of the research & development has gone into the sexy drugs (no pun intended) and the drugs that fight really scary diseases like cancer — because these products have wide profit margins in the time before their patents expire.

Well, the bacteria have finally caught up with us after years of subservience to penicillin. New super-mutated MRSA, short for methicillin-resistant Staphylococcus aureus, are deadly because they don’t respond to traditional antibiotics. Dealing with hospital infections is expensive, especially now that Medicare will withhold funding from hospitals that report too many of these infections – according to this article in Bloomberg News. Now hospitals have every incentive to prevent these bacterial infections (a chest infection after heart surgery can cost upwards of $250,000 to treat with standard methods), many not-for-profit hospitals simply can’t afford to have patients getting infections. And because traditional screening and treatment methods are inefficient and expensive (we didn’t have these superbugs before), there is now an incentive for drug companies to produce better antibiotics.

Cubicin, a new drug by Cubist Pharmaceuticals, Inc., treats aggressive infections — and a week’s dose is cheaper than one extra day at a hospital…not to mention the value of a freed bed and resources for another patient. Pfizer and other drug companies are now racing to compete with Cubicin, because the market has created demand…and that demand hasn’t been artificially suppressed by Medicare agreeing to pay for the expensive, antiquated treatments. This is a prime example of a government crutch being withheld, and the market responding with innovations that will likely improve health care outcomes and save lives. All with less tax dollars. If a $250,000 infection that used to be paid for my Medicare (tax dollars) can now be treated with $1,500 worth ofCubicin — we are all better off for it. And it took the withholding of Medicare funds for hospitals to create demand for the development of the next waive of antibiotics.

Other life-saving innovations driven by hospitals’ renewed demand: computerized germ-tracking tools from non-profit Premier Inc., based in Charlotte, North Carolina, Salt Lake City-based TheraDoc Inc., and MedMined, a unit of Dublin, Ohio-based Cardinal Health Inc. MedMined’s surveillance systems can trace of drug-resistant outbreaks to their origin, and typically pay for themselves in one year.

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