Business of Well-being

Choosing the Right Hospital: Helping Employees Avoid Potential Harm

Are your employees exposed to medical errors or perhaps even overtreatment-and if so, as an employer, what is your responsibility? Fifteen years ago, after the Institute of Medicine published a 223-page report called To Err is Human: Building a Safer Health System, a national public outcry ensued. The report alleged that up to 98,000 people die in hospitals every year due to preventable medical errors, which represents up to four percent of all deaths in the United States.

The medical community was featured on major news outlets including NBC, ABC, and in the New York Times, the  Washington Post, and USA Today; it is estimated that over 100 million Americans were exposed to coverage about the epidemic of medical errors.(1)This national outrage created a path toward change with numerous legislative changes and the creation of organizations (both public and private) focused on patient safety and quality of care, including:

  • the Healthcare Research and Quality Act of 1999 (which authorized the Agency for Healthcare Research and Quality, or AHRQ, as the lead agency);
  • the Leapfrog Group, officially launched in November 2000 (citing To Err is Human as a focal point for their founding)(2); the Patient Safety and Quality Improvement Act of 2005; the AHRQ program Voluntary Reporting of Adverse Events; and in 2004, the launch of the "100,000 Lives Campaign" by the Institute for Healthcare Improvement (IHI), with the goal to extend or save 100,000 lives from January 2005 through June 2006 by getting hospitals to adopt targeted  best practices. This program was meant to be recurrent.

The problem was serious but optimism was high to fix the system, and the IHI aptly summed up the spirit of the age: "Some is not a number. Soon is not a time. The number is 100,000. The time is NOW." Fast forward fifteen years later-though important strides have been made and millions of private and tax dollars spent, the results are objectively underwhelming. In fact, some have suggested that the situation has actually gotten worse. At a minimum, it appears that the initial projections of 98,000 deaths were not accurate.

According to a 2013 study, the actual number is likely two to four times higher, representing 210,000 to 440,000 preventable deaths occurring in hospitals per year.(3) Leah Binder, President and CEO of the Leapfrog Group, captured the situation in this way: "Hospitals are killing off the equivalent of the entire population of Atlanta one year, Miami the next, then moving to Oakland, and on and on."(4)

All told, Americans will have an average of 9.2 medical procedures in their lifetime, and according to studies, in 25 percent of these procedures they will be harmed by medical errors.(5) It is time to acknowledge that at best, the healthcare system as we know it is incapable of repairing itself; at worst, it has only a passive interest in doing so due to conflicting financial considerations.

The fee-for-service structure has the potential to reward these types of medical errors, as hospitals charge for treatment required to manage the consequences of medical errors, something we see regularly at Global Excel Management (GEM).The future is not entirely bleak, however. Many hospitals offer quality care at reasonable prices for specific conditions; the key is to find these hospitals.

How Hospitals Do Harm-Hospital Overtreatment

The United States spends more than $3 trillion per year on healthcare. Hospital absorb 35 percent of that, or more than $1 trillion, which represents the single largest source of spending within healthcare. Many studies support that 30 percent, or around $300 billion to $350 billion or more of these funds are compensation for unnecessary and inefficient care.(6) Many facilities overuse key resources, which can be both expensive and harmful.

Diagnostic imaging such as MRI and CT scans, for example, are often used in a hospital setting but many, possibly up to a third, of these tests are not necessary. While some would say that it is better to be safe than sorry, the fact is that these tests expose patients to large doses of radiation, and new studies have found that up to 29,000 deaths can be attributed to overexposure to radiation in the clinical setting.(7)

Another example is the overuse of blood tests on patients scheduled for heart surgery. A study from the Annals of Thoracic Surgery found that there was an average of 116 tests per patient and that many patients required transfusions to offset their blood losses. This in turn led to more post-operative infections, more time on a ventilator, and more deaths.(8) Diagnostic testing is big business for hospitals but unfortunately there are unintended consequences as it relates to patient safety.

Patient-Centered Care

Hospital systems are notorious for buying up new technologies and marketing the fact that the care they render is superior to that of the competition. However, not all technologies actually represent advancements in quality of care. Take, for example, robotic surgical technologies, which have great promise for certain types of surgery, but overall have not been proven to provide an additional benefit to most patients.(9)

Large pieces of equipment, in the case of a patient "crashing" during surgery, can actually get in the way of a surgical team that needs to intervene. Furthermore, robotic surgical technologies are very expensive to purchase and maintain and lead to a surcharge on hospital bills. For certain procedures, it is estimated that these robotic technologies add an average of 11% to the total cost of the surgery, but rarely add a tangible benefit to the patient.(10)

GEM recently reviewed a claim where use of the Da Vinci Robot increased the billed charges by over $120,000 (in this case 70% of the total bill), with no supporting documentation demonstrating its necessity. Through discussions the provider wrote off all charges associated with the use of the robotic device. Not only do hospitals over-invest in some technologies, they can under-invest in new approaches or technologies that do have proven benefits for patients.

For example, large and well-funded university-based hospitals are actually slower to adopt new methodologies as the teachers follow an "old guard" mindset, whereas smaller and lesser-known community hospitals can be much more progressive and eager to adopt new and improved methods.(11)

Hospital Errors

Though certainly not intentional, many serious and preventable errors can occur in the hospital. The worst of such errors are called "never events":

  • Foreign object retained after surgery (e.g. scalpels, sponges, retractors)
  • Air embolism
  • Pressure ulcers, Stage 3 and 4
  • Trauma and falls
  • Collapsed lung due to medical treatment
  • Breathing failure after surgery
  • Postoperative PE/DVT (a deadly blood clot)
  • Wound split open post-surgery
  • Accidental cuts or tears linked to medical treatment

Not all errors are so extreme. Other examples include post-surgical infections due to suboptimal cleanliness, or preventable readmissions (a.k.a. revolving door syndrome or "bouncebacks") within 30 days of discharge due to poor communication, coordination of care, etc. Some hospitals, even after adjusting for severity, have twice the rate of readmissions as that of other similar hospitals.(12)

To make matters worse, a recently published article actually quantified that hospitals with higher rates of complications had higher profit margins as compared to hospitals with lower complication rates. In contrast, lower cost hospitals that are less likely to over-utilize healthcare services had better quality than higher charging facilities.(13)

Hospital Quality Performance is Disease-Specific

All hospitals must be licensed to provide care, which means that they meet the minimum safety guidelines and have the proper infrastructure to provide care. Many consumers assume this means a facility must also provide high quality care, and this is simply not the case. The Joint Commission offers both hospital accreditations and disease-specific certifications. Whereas the former deal with the entire organization, the latter deal with establishing best practices for certain types of care for a specific disease.

Hospitals may get a passing grade overall, but that doesn't mean every department functions at a high level. For this reason, quality of care data is collected on a disease-specific basis so that high hospital performers can be duly recognized for their excellence in certain types of care. Hospitals are required by the government to submit information on outcomes, which can be used to determine which hospitals are better at providing disease-specific care.

Unfortunately this data is rarely considered or presented to consumers. Many consumers assume that if a hospital is "in-network", it provides high quality care for their specific disease. However most, if not all, preferred provider organizations (PPOs) end their review of quality of care at the minimum hospital accreditation level, not assessing differences in patient outcomes of care on a disease-specific basis, and they assign a percentage discount for the aggregate of all the services provided at the hospital.

What if a facility's quality for neurosurgery is high, but the quality on orthopedics is very low? Why would one pay the same 'discounted' rate for both? And shouldn't the patient be made aware of these stark differences in quality at a facility they are told is "in-network" and therefore high-quality? Is there another in-network facility that could do better for the orthopedic procedure and possibly for less cost?

How Consumers Choose Hospitals: Looking for a Better Way

With a lot of misinformation made available to the public about hospital care, attitudes such as "more is better" or "the most expensive care is the best care." This is simply not factual. And yet consideration for quality and efficient care (i.e. lower cost) in hospital selection is virtually non-existent in today's market.

Today's consumers often choose the hospital based on physician recommendation, network status, the one with the most billboards, the easiest parking, the nicest lobby, the best reputation with friends and family, etc. In other words, consumers (and in most cases, physicians) do not consult hospital quality of care data.

Hospital Quality of Care Data Options

There is a host of available resources to help determine a hospital's quality for a variety of care types. Here are a few examples along with the data they consider for their findings:

  • The US News & World Report's findings are derived from three measures weighted equally: hospital infrastructure, hospital reputation with subspecialists, and 30-day mortality rates.
  • HealthGrades proprietary rating system predominantly uses mortality for most of their ratings, with select procedures assessed for post-surgical complications.
  • Leapfrog focuses primarily on structure, process and best practices for patient safety.
  • Comparion Medical Analytics considers mortality, complications, inpatient quality, core process, patient safety, and patient satisfaction. Data is subdivided by clinical categories (such as cardiology, orthopedics,etc.), and adjusted for age and severity.

But can this data be used to improve hospital selection and if so, what are the tangible benefits of doing so? Consider the following real example of a coronary bypass in an urban center in Illinois using a primary PPO: Facility 1 (a university hospital), rated at the 48th percentile of quality for DRG 234 (Comparion), charges on average $201,000, and the in-network rate is $129,000.

Facility 2, rated at the 98th percentile in quality for DRG 234 (Comparion), charges on average $147,000, and the in-network rate is $89,000. By simply choosing Facility 2, the member receives higher quality services (and is more likely to avoid over utilization and harm) and the payer (an employer in this case) saves approximately $40,000 for this episode of care.

In a real world example, GEM was asked to secure a case rate for a specialized neck surgery in New York. After reviewing cost and quality metrics and the treating doctor's admitting rights, GEM was able to have the surgery moved to a facility less than 10 miles away to a hospital with higher quality of care and saved over $100,000 by accessing a more favorable discount.

Arming Patients with Knowledge

Patients want to know that they are receiving the best care available and at the lowest out of pocket expense for themselves. Insurers and self-funded employers want to obtain affordable quality care for their members. With proper plan language and incentives, members can be engaged to choose high value care.

By factoring costs, quality and discount information, substantial savings can be achieved for payers and patients through the strategic selection of high quality and lower cost facilities. Most importantly, the member may be spared from needless and expensive harm.

Expert Suggestion

Dr. Marty Makary, Surgical Director at Johns Hopkins and New York Times best-selling author of Unaccountable: What Hospitals Won't Tell You and How Transparency Can Revolutionize Health Care, offers this suggestion: "Businesses may find it in their best interests to actively assist people to find the best medical care."(14)

Employers can use cost-quality tools to help protect their employees in a tangible and realistic way while drastically reducing hospital costs. By educating employees, and providing rewards to encourage usage (adoption is a critical component to these programs), employers can truly reform healthcare one admission at a time.

Spencer Whipple is Large Loss Specialist at Global Excel Management. He advises clients, including self-funded TPAs, stop loss carriers and international travel insurers, on cost containment strategy for catastrophic claims. Spencer works closely with GEM's team of claims resolution specialists to align resources and approaches with clients' needs on their most difficult claims.

About the Author

Benjamin Tabah manages GEM's Product Development and Marketing team. His focus on developing different approaches to cost management has led to a commitment to developing healthcare literacy tools designed to provide self-funded groups with the knowledge required to make informed decisions about their healthcare needs.


1 Susan Dentzer, Media Mistakes in Coverage of the Institute of Medicines Error Report,, December 2000.

2 Retrieved from

3 John T. James, PhD. "A new, evidence-based estimate of patient harms associated with hospital care",, Lippincott Williams & Wilkins, 2013.

4 Leah Binder, "Stunning News on Preventable Deaths in Hospitals",, September 3, 2013.

5 New England Journal of Medicine, "Temporal trends in rates of patient harm resulting from medical care"; 363, no. 22 (2010): 2124-34, as quoted in Marty Makary, Unaccountable: What Hospitals Won't Tell You and How Transparency Can Revolutionize Health Care (Bloomsbury USA, 2013), introduction.

6 Institute of Medicine, Transformation of Health System Needed to Improve Care and Reduce Cost,, press release, September 6, 2012.

7 Leana Wen, MD and Josh Kosowky, MD. When Doctors Don't Listen: How to avoid misdiagnoses and unnecessary tests (St. Martin's Press), January 2013, 81.

8 The Annals of Thoracic Surgery, March Issue News Release, March 2015, as cited by Robert Preidt, "Do Heart Surgery Patients Get Too Many Blood Tests?", March 2, 2015.

9 This section is largely indebted to research from Makary, Unaccountable, chapter 12, "All American Robot".

10 Eva Kiesler, PhD. "Study Shows Robotic Surgery Holds No Major Advantages for Bladder Cancer Patients",, July 24, 2014.

11 Makary, Unaccountable, chapter 12.

12 The Dartmouth Institute for Health Policy and Clinical Practice, "U.S. Hospitals, Facing New Medicare Penalties, Show Wide Room for Improvement at Reducing Readmission Rates",, September 28, 2011.

13 Sunil Eappen, MD; Bennett H. Lane, MS; Barry Rosenberg, MD, MBA; Stuart A. Lipsitz, ScD; David Sadoff, BA; Dave Matheson, JD, MBA; William R. Berry, MD, MPA, MPH; Mark Lester, MD, MBA; Atul A. Gawande, MD, MPH. "Relationship Between Occurrence of Surgical Complications and Hospital Finances", Journal of the American Medical Association (JAMA), April 17, 2013.

14 Makary, Unaccountable, 77.