The impact on hospitals of reducing surgical complications suggests many will need shared savings programs with...

Reducing the complications that patients experience following surgery has garnered renewed attention from the medical and policy community. Reducing surgical complications is, foremost, critically important for patients. Moreover, in a competitive environment increasingly characterized by transparency of outcomes, the surgical complication rate is an important measure of hospital performance that could strongly influence choices of care and care sites made by patients and payers. However, programs to achieve such improvements can reduce hospital revenues, as reimbursements to treat patients for complications decrease. In this article we examine the business case for hospitals' consideration of programs to reduce surgical complications. We found that if a hospital's surgical inpatient volume is not growing, such a program results in negative cash flow. We also found that if a hospital's surgical volume is growing, and if the hospital can sufficiently reduce the average length-of-stay for surgical patients without complications, the cash flow could be positive. We recommend that hospitals with limited growth prospects that are nonetheless contemplating a surgical complication reduction program establish agreements with payers to share in any savings generated by the program.