Wolters Kluwer Health Care News: Economic impact of preventable medical errors significantly higher than anticipated; May reach $1 trillion dollars

New York (October 17, 2012) – According to an article published in the current issue of Wolters Kluwer’s Journal of Health Care Finance http://www.mediregs.com/economics_of_quality_care preventable medical errors may cost the U.S. economy up to $1 trillion dollars in lost human potential and contributions. That estimate is exponentially higher than previous studies, which focused solely on direct medical expenses associated with preventable medical errors.

Previous studies showed the economic impact to range from $17 billion up to $50 billion annually and only focused on direct medical costs such as ancillary services, prescription drug services, and inpatient and outpatient care. In this article, the authors develop a simple model to begin to more fully estimate the economic impact of deaths resulting from preventable medical errors.

Stephen Davidow, one of the article’s co-authors, used Quality-Adjusted Life Years (QALYs) to develop a more complete accounting of the economic impact when someone dies from a preventable error. QALYs are a standard economic measure of the quality and quantity of human life. Davidow is a health policy analyst based in Chicago.

The authors based their calculation on several well-accepted reports, studies, and economic measures. They started with the 1998 landmark Institute of Medicine (IOM) report, “To Err Is Human,” which suggests that up to 98,000 deaths in the U.S. result from preventable medical error. Then they estimated an average of ten years of life lost for each of the 98,000. For an infant, the number of years is probably much higher than for an adult in his or her 60s or 70s. A range of $75,000 to $100,000 per year was applied – standard values for a year of life that account for lost earnings and other contributions. Based on that, there is a loss of $73.5 billion to $98 billion in QALYs. However, an article in last year’s Health Affairs says preventable deaths due to medical errors are 10 times higher than the IOM estimate. If that is the case, the economic impact is a loss of $735 billion to $980 billion – nearly $1 trillion – in human potential.

“Previous studies do not come close to illustrating the economic loss of human potential and contribution, which families, colleagues, businesses, and communities experience when someone dies from a preventable medical error,” said author Stephen Davidow.  “The magnitude of the problem for our society is many orders of magnitude greater than just the medical costs.”

“There has been too much focus to date on just the health care cost impact of medical errors. This analysis makes an important contribution to our understanding of the broader economic impact of preventable medical harm,” said Jim Unland, Editor, Journal of Health Care Finance. “

Davidow notes that, to estimate the true economic cost of medical errors, there must be an effort to calculate lost productivity and assign a value to the economic activity of the 1 million or more patients who suffer from a medical error but survive, as reported by the IOM. Some patients clearly have no long-term problems but others may be disabled for an extended period of time or for the rest of their lives. What this means is that the economic impact could be much greater than $1 trillion dollars.

About the Journal of Health Care Finance

The Journal of Health Care Finance, published by Wolters Kluwer Law & Business, is the only quarterly journal devoted solely to an examination of various health care sectors, trends, and policies in the financial context and features a wide array of expert authors. Each issue targets a key area of health care finance. Some of the Journal’s recent topics include  hospital/physician contracts, alternative delivery systems,  financial performance under PPS, improving productivity, taxation management, health care insurance, employee benefit cost-containment, joint ventures, mergers and acquisitions, and  employee incentive systems.

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Wolters Kluwer Law & Business
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