An important study evaluated the direct medical costs of a wide range of adverse events in hospitals in the Netherlands. This study included unplanned admissions; unplanned readmissions; hospital acquired complications including infections, neurological complications, and other diagnoses; unexpected mortality, and other issues. A study of a wide range of adverse medical events in hospitals in the Netherlands suggested that 30,000 inpatient admissions included a preventable adverse event. On the basis of data collected in 2004, it estimated that the annual costs of preventable adverse events in Dutch hospitals was 161 million euros [2]. Other European studies have evaluated potentially preventable mortality in Dutch hospitals [3], hospital acquired urinary tract infections [4], nosocomial pneumonia [5,6], hospital acquired infections [7], pressure ulcers [8], and adverse events in British Hospitals [9]. The Hoonhout and Zegers studies were carried out through the Netherlands adverse events research and used the same databases.

Studies have also evaluated the financial impact of adverse health care outcomes and related issues in the United States including surgical site infections [10,11], urinary tract infections [12], clostridium difficile [13], and hospital acquired pressure ulcers [14]. Like their European counterparts, some of these have included efforts to address the relationship between health care outcomes and costs [15].

The context of health care reform in national politics has become increasingly important for evaluation and improvement of hospital outcomes. This context relates to the process of health care reform and the development of software to define and analyze these outcomes. Despite increasing interest in the subject, research concerning the costs of adverse health care outcomes and efforts to address them have been hampered by the lack of major provider incentives for quality improvement and the difficulties of data collection in this area. Recent developments suggest that situation is changing in the United States.

Evidence is growing that the health care reform movement in the United States that was stimulated by the Obama Administration will attempt to reduce provider reimbursement for adverse clinical outcomes. A major driver of this process has been increased public awareness of the high level of health care spending in the United States. Within the health care reform debate, the Obama Administration has repeatedly emphasized the lack of connection between high levels of health care expenditures and outcomes such as life expectancy and mortality compared with other nations [16-18].

These issues have been complicated by the impact of the economic recession of 2008 and 2009. The need for increased government spending by the U.S. federal government to stimulate economic recovery has been constrained by the continued increase in public expenditures for health care through the Medicare and Medicaid programs [19]. In his Inaugural Address, President Obama called for higher quality of care at reduced costs [20].

In this context, it has been suggested that inpatient hospital complications generate large expenses in Europe and the United States. These complications are diagnoses which developed after admission to inpatient hospital beds. These complications are defined as harmful events or negative outcomes occurring during inpatient hospitalization that result from the processes of care and treatment rather than the natural progression of diseases [11].

Inpatient hospital complications are important because they can result in substantial adverse outcomes for patients. Events such as infections and circulatory complications cause considerable discomfort for patients, sometimes with life threatening consequences. These events disrupt the patients' recovery as well as their return to residential environments and employment. Because complications can extend hospital stays and consume additional resources, they can also block access to hospital beds for other patients.

Inpatient complications are also costly. They result in large expenditures for additional nursing time, pharmaceuticals, and tests before discharge is possible. Although the frequency of complications is often low, the total additional expenditures can be large at the provider and system wide levels [16].

Fortunately, the rising interest in improving the quality of care as a means of reducing costs are being supported by the availability of new resources for the collection and analysis of health care outcomes data. These include new administrative data categories which address outcomes such as inpatient hospital complications and computer software such as the Potentially Preventable Complications system developed by the 3M™ Corporation which was created to analyze these indicators [21]. The Potentially Preventable Complications system was developed to evaluate inpatient hospital outcomes based on administrative data. The system has been validated in preliminary studies by the New York State Department of Health and the Massachusetts Hospital Association. The system is currently being evaluated in a series of demonstration projects in the United States.

This objective of this study was to describe the Potentially Preventable Complications software as a tool for evaluating hospital inpatient outcomes. The study showed the use of this software to analyze the connection between health care outcomes and expenses in United States administrative data at the state and local levels. The study also described the use of the software to plan and implement interventions to reduce hospital complications in one U.S. metropolitan area.

Analysis of the charge data involved editing of information submitted by hospitals. Patient data that were incomplete, or based on a discharge status of transferred to another acute care facility or expired were excluded. It has been estimated that these data involved a maximum of 6 percent of the records from each state. The resulting information from the California Office of Statewide Health Planning and Development was based on fiscal year 2008 (July 2007 - June 2008) and included 235 hospitals. The resulting information from the Maryland Health Services and Cost Review Commission was based on fiscal year 2008 (October 2005 - September 2006) and included 43 hospitals [24].

The information from Maryland included uniform categories of financial data that made it possible to estimate costs accurately from charge data. The California charge data did not include this level of structure and were evaluated using a charge to cost ratio of 1.264. A regression model was applied to both data sets to estimate average costs per patient by Potentially Preventable Complications. Examples of incremental costs added to patient expenses for PPCs with the highest frequencies in both states are identified in Table ​Table33[24].

The data in Table ​Table33 indicate that the mean incremental costs per Potentially Preventable Complication were similar. It was notable that different data bases and need for separate statistical methods produced estimated incremental costs that did not vary greatly. At the patient level, the estimated impact of these costs was substantial. The incremental costs of the complications for these categories ranged from $4,950 to $25,401 in California and from $3,910 to $16,709 in Maryland [24]. These data included results from the study, rather than a separate analysis.

In the development of their demonstration program concerning Potentially Preventable Complications, the Hospital Executive Council and the Syracuse hospitals also produced estimates of the impact of these outcomes on hospital costs. Like the evaluations involving the California and Maryland data, these comparisons were based on inpatient populations with the same APR DRGs and severity of illness levels that experienced the PPCs and patients with the same risk characteristics who did not experience the PPCs. The Syracuse comparisons, however, were based on actual cost data from the hospitals. Through this stratification, to the extent possible, the differences in costs identified resulted from the complications involved, rather than variations in diagnoses and severity of illness of the populations.

Examples of the cost analyses from three of the Syracuse hospitals are summarized in Table ​Table4.4. They include discharges, total costs, and mean costs per discharge for selected PPCs during the period before implementation of the demonstration program. The comparisons were based on patients with and without each PPC who were assigned to the same All Patients Refined Diagnosis Related Groups and severity of illness levels within these APR DRGs.

The comparisons of actual costs from the Syracuse hospitals, like those from California and Maryland, suggested the substantial impact of complications on expenses for hospital inpatients. For patients with urinary tract infection, clostridium difficile colitis, and decubitus ulcer at Community-General Hospital, mean costs for patients with the complication were more than double those for the same at risk populations without it. For patients with urinary tract infection at Crouse Hospital, pneumonia at St. Joseph's Hospital Health Center, and decubitus ulcer as a PPC at both hospitals, expenses were several times those for at risk groups without the complications. A portion of this may have resulted from surgery patients and those with higher severity of illness at those hospitals. These comparisons were developed based on actual hospital costs, stratified to include patients with and without the PPC that were assigned to the same All Patients Refined Diagnosis Related Groups and severity of illness

A review of drivers of these costs at St. Joseph's Hospital Health Center and Crouse Hospital suggested that increased expenses for nursing, pharmaceuticals, and diagnostic testing were most responsible. These expenses were based on the cost of these resources related to lengths of stay at the hospital. Substantially longer stays for patients with the PPCs accounted for higher use of resources by this group. The analysis did not include separate analysis of the drugs consumed or the procedures associated with the adverse events.

Evaluation of the impact of Potentially Preventable Complications involved the use of severity adjusted benchmark data. Initial use of this information was based on California inpatient data for 2005 and 2006. Severity adjusted benchmarks from this source for medical and surgical inpatients at Crouse Hospital and St. Joseph's Hospital Health Center in Syracuse during 2008 are summarized in Table ​Table55.

In addition to containing hospital benchmark data, this information comprised a summary of the incidence of major Potentially Preventable Complications in California, the largest inpatient state database in the United States. The data indicate that the highest complication rates per 1,000 hospital discharges were 7.04 - 10.20 for Urinary Tract Infections, 7.71 - 7.72 for Accidental Punctures, and 5.22 - 8.73 for Pneumonia and Other Lung Infections.

Data related to Potentially Preventable Complications in the Syracuse hospitals also involved early evaluation of programs for managing these outcomes that were implemented between October 2008 and March 2009. These comparisons involved data for January-June 2008, the period immediately prior to implementation of the projects, and January-March and April-June 2009, the most recent period for which coded inpatient data were available for the hospitals. This information is summarized in Table ​Table66.

This information demonstrated that, within these time frames, complication rates had declined slightly for three of the initiatives. These included decubitus ulcer, and post hemorrhage/acute anemia at St. Joseph's Hospital Health Center and pulmonary embolism at Crouse Hospital. For these projects, differences between hospital and severity adjusted benchmark rates fell from significant to nonsignificant levels. The rate for urinary tract infection at Community-General Hospital declined from nonsignificantly higher to nonsignificantly lower than the benchmark. These declines resulted from before and after comparisons, rather than the use of control groups. In the participating hospitals, it was not possible to develop control groups within the scope of the study.

These comparisons also demonstrated that differences between hospital and severity adjusted PPC rates increased for urinary tract infection and decubitus ulcer at Crouse Hospital and for clostridium difficile colitis at Community-General Hospital. Only the increase for urinary tract infection reached a significant level. These declines resulted from before and after comparisons, rather than the use of control groups.

These data suggested that, based on the average cost differences identified in Table ​Table4,4, the financial impact of managing complications could be considerable. This point was based on simple calculations of the impact of changes in complications at the Syracuse hospitals during the period of the study, rather than a specific analysis. For example, declines in PPC rates at St. Joseph's Hospital Health Center between January-June 2008 and January-March 2009 reduced the first quarter costs for patients at risk of pneumonia by $386,707.50 and for those at risk of decubitus ulcer by $134,422.5. These expenses would translate into annualized savings of $1,546,830 for pneumonia and $537,690 for decubitus ulcer. For Crouse Hospital, the decline in complication rates produced a first quarter savings of $20,218. For Community-General Hospital, the decline in complications for urinary tract infections produced a savings $90,940.

The early Dutch research on this subject has been interesting. It suggests that there are important cost implications of a wide range of adverse health care outcomes. This type of wide view of the subject is extremely necessary given current limitations on health care resources. More studies of this nature will be of great benefit to health care policy makers and providers.

The research from the United States presented in the article was of a more focused nature. It involved a single category of adverse outcomes, complications that develop within hospitals after inpatient admission. As an example, the complications data suggested what will be necessary if the management of health care outcomes is to move from the shadows where it has resided to become a major focus for cost containment, as well as the improvement of care.

In the United States, hospital reimbursement is based on prospective payments per discharge for public and private payors. Under this system, hospitals are paid a relatively fixed rate per patient. This encourages efficiency through reduction of complications, extended stays, and other developments which consume hospital resources. The current system includes a small penalty for the presence of inpatient complications. The amount of this penalty is much lower than the potential excess costs related to complications that were identified in this study.

In this context, the developing experience with inpatient hospital complications in the United States demonstrates the resources that are needed for this to occur. At the technical level, these include categories within administrative data, such as the Present on Admission indicator, that make it possible to collect and analyze outcomes data at the provider and regional levels. These resources also include software that focuses on the indicator through a sophisticated system of logic. It seems clear that the Potentially Preventable Complications algorithm, although still under development, contains the exclusions and criteria necessary to convert administrative data, including the Present on Admission indicator, to usable information. The linkage between the PPC software and the All Patients Refined Severity of Illness System produces the ability to analyze and compare outcomes data by level of illness within hospitals and large populations. The availability of this resource is helping to move quality assurance staff in hospitals like those in Syracuse from record keepers to clinical managers.

Prof. dr. Gert P. Westert (2,3)

1 Hospital Executive Council, PO Box 35089, University Station, Syracuse, New York, 13235, USA

2 Tilburg University, TRANZO, PO Box 90153, 5000 LE Tilburg, The Netherlands