Impact of surgical complications on hospital costs and revenues: retrospective database study of Medicare claims

Aim: To compare the length of stay, hospital costs and hospital revenues for Medicare patients with and without a subset of potentially preventable postoperative complications after major noncardiac surgery. Materials & methods: Retrospective data analysis using the Medicare Standard Analytical Files, Limited Data Set, 5% inpatient claims files for years 2016-2020. Results: In 74,103 claims selected for analysis, 71,467 claims had no complications and 2636 had one or more complications of interest. Claims with complications had significantly longer length of hospital stay (12.41 vs 3.95 days, p < 0.01), increased payments to the provider ($34,664 vs $16,641, p < 0.01) and substantially higher estimates of provider cost ($39,357 vs $16,158, p < 0.01) compared with claims without complications. This results on average in a negative difference between payments and costs for patients with complications compared with a positive difference for claims without complications (-$4693 vs $483, p < 0.01). Results were consistent across three different cost estimation methods used in the study. Conclusion: Compared with patients without postoperative complications, patients developing complications stay longer in the hospital and incur increased costs that outpace the increase in received payments. Complications are therefore costly to providers and payers, may negatively impact hospital profitability, and decrease the quality of life of patients. Quality initiatives aimed at reducing complications can be immensely valuable for both improving patient outcomes and hospital finances.