Medical Errors The 19.5 Billion Dollar Problem with Practical Solutions

At a time when government officials and academic institutions are preparing for the influx of patients (31 million) that will come as a result of the Patient Protection and Affordable Care Act, a recent report shows some disturbing results for the future.

According to findings released this week from a study commissioned by the Society of Actuaries (SOA) and completed by consultants with Milliman, Inc., the report found that “measurable medical errors cost the U.S. economy $19.5 billion in 2008.” Approximately $17 billion was the result of providing inpatient, outpatient and prescription drug services to individuals who were affected by medical errors.

To carry out the study, “the report used claims data of 24 million people to provide an actuarially sound measurement of costs for avoidable medical injuries.” Using this data, the report determined that “of the approximately $80 billion in costs associated with medical injuries, around 25 percent were the result of avoidable medical errors.”

In commenting on these findings, Jim Toole, FSA, CERA, MAAA and managing director of MBA Actuaries, Inc., noted that “this report highlights a singular opportunity for both improving the overall quality of care and reducing healthcare costs in this country.” One likely solution to this problem would be continuing medical education (CME), which addresses ways to reduce medical errors. CME providers could create and offer uniquely designed programs to address specific errors depending on the type of institution or medical provider, while taking other factors into consideration (e.g. resources, equipment, legal issues, etc.).   The implementation of such small steps as checklists (recently made popular by the book The Checklist Manifesto) could lead to great reductions in medical errors.

The impact of medical errors is also significant because as the study found, “$1.1 billion was from lost productivity due to related short-term disability claims, and $1.4 billion was lost from increased death rates among individuals who experienced medical errors.” As a result, actuaries “believe that reducing medical errors is an effective way to control healthcare cost trends for the commercial population,” according to results from a recent SOA survey.

What is particularly troubling is that while the study found 1.5 million measurable medical errors occurred in 2008, this “number includes only the errors that could be identified through claims data, so the total economic impact of medical errors is in fact greater than what we have reported.” Other problematic findings included:

• The average total cost per error was approximately $13,000;
• In an inpatient setting, seven percent of admissions are estimated to result in some type of medical injury; and
• The measurable medical errors resulted in more than 2,500 avoidable deaths and more than 10 million excess days missed from work due to short-term disability.

The Wall Street Journal, which also did an analysis of the study, noted that the report found “bed sores — which are almost always considered to be the result of an error — produced the largest annual error cost, at almost $3.9 billion, followed by post-op infections ($3.7 billion), device complications ($1.1 billion), complications from failed spinal surgery ($1.1 billion) and hemorrhages ($960 million). Consequently, the study also identifies the 10 medical errors that are most costly to the U.S. economy each year. Approximately 55 percent of the total error costs were the result of five common errors:

• Pressure ulcers
• Postoperative infections
• Mechanical complications of devices, implants, or grafts
• Postlaminectomy syndrome
• Hemorrhages complicating a procedure

Accordingly, SOA asserted that to address this issue now, the insurance industry must “assume an active role by helping healthcare systems implement an actuarial approach, which can more systematically identify potential causes of medical errors than alternative approaches.”

It would also be beneficial for the insurance industry and health care providers to collaborate with CME providers to create activities that disseminate the type of information and training that will help identify potential causes of medical errors and help reduce their occurrence.  These are the types of program that potential does not nearly match the benefits we will see by helping our healthcare system save $19.5 billion a year, and preventing 2,500 deaths and millions of medical errors.

Even though less than $1 billion in 2009 was spent on commercial support of CME, if even $500 million of $19.5 billion lost a year was spent on support of CME to help educate our health care providers keeping them up to date on new medicines, treatments, and ways to reduce medical errors, it is hard to imagine monies better spent that would save both lives and money.