The impact of complications following open colectomy on hospital finances: a retrospective cohort study

BACKGROUND: When hospitals suffer financial losses when postoperative complications occur, they may have a direct financial incentive to initiate quality improvement programs. The purpose of this research was to determine the relationship between complications following open colectomy and hospital finances. METHODS: After obtaining Institutional Review Board approval, we conducted a retrospective chart review of 276 open colectomies performed at the Hospital of the University of Pennsylvania. The medical records were manually reviewed for complications that occurred within 30 days after surgery. Financial information, including total, fixed and variable costs, was obtained from the hospital’s cost accounting database. Reimbursement assuming payment by Medicare was calculated. Differences in costs, reimbursements and total margins were analyzed. RESULTS: Of 276 patient records reviewed, 61 (22%) of the patients experienced postoperative complications. When complications occurred, mean total costs increased from $23,101 to $48,180, fixed costs increased from $14,516 to $30,339 and variable costs increased from $8,535 to $17,848 (P < 0.001 for each comparison); the mean reimbursement increased from $23,231 to $35,651 (P < 0.001); and the total margin decreased from $131 to - $12,528 (P < 0.001). Complications were associated with a more than twofold increase in length of stay in the hospital. Multiple regression modeling indicated similar increases in each of the financial variables and length of stay as a result of postoperative complications. The impact of these complications on each outcome measure was similar in effect for patients in the matched subset of 100 patients. CONCLUSION: Our results demonstrate a financial incentive for hospitals to investigate quality improvement measures to prevent postoperative complications and avoid the associated financial losses.