Understanding the Cost of Medical Errors
Medical errors or complications of care result in substantial
direct and indirect costs not only to the individual patient affected,
but also to our nation as a whole. 1 As you will see, costs resulting
from medical error actually amount to revenue for our healthcare
system. This outrageous payment structure is one of the primary
barriers to safety reform.
Not all medical errors result in physical harm or injury (see,
All About Medical Errors).
Victims of medical error, however, frequently experience additional
pain and suffering and often incur additional financial costs: the
price to repeat the procedure and/or additional medical treatment.
All purchasers and patients pay for medical errors when insurance
costs and co-payments are inflated by services that would not have
been necessary had proper care been provided. 2
L. Millenson, author of the book, Demanding Medical Excellence,
puts it this way: “If somebody makes a mistake, who gets hurt?
It’s not the doctor. Who pays? It’s not the hospital.
Nobody’s doing this on purpose, but they’re not losing
money on it, either.” 3
Medical errors also result in costs which are both direct and indirect
and are usually in the form of lost income, lost household production,
disability and medical costs. The total national cost of preventable
medical errors is currently estimated to be between $17 and $29
billion. Healthcare costs represent over one half of this figure. 4
Therefore, preventable medical errors generates an additional $8.5
to $14.5 billion in revenue every year!
The following chart shows some of the most common types of medical
error which occur in a hospital setting, together with their respective
of Preventable Medical Error
||Postoperative bloodstream infection 5
||Infection due to medical care 6
||Reopening of surgical incision 7
||Ventilator-associated pneumonia 8
||Adverse drug event 9
Most experts agree that there is a total lack of incentive to improve
the quality of our healthcare system. Our providers are actually
paid more when quality is worse, such as when complications occur. 10
When Duke University Hospital created an integrated program to
treat congestive heart failure, consumers were healthier - but the
hospital lost money because of the resulting decline in admissions
and the absence of complications. 11
Additionally, ten hospitals in Utah had the same experience after
implementing practice guidelines for pneumonia treatment. Providing
quality healthcare made the Utah providers financially worse off! 12 It’s obvious that providers are less likely to improve quality of care if they suffer financially when doing so.
Such payment arrangements are economically perverse. No rational
system of compensation rewards healthcare providers for making patients
worse off! 13
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Last update on: 10/02/06