New Leapfrog tool calculates the cost of hospital errors

Calculations based on claims data, hospital safety scores

Topics: Quality, Performance Improvement, Safety, Medical Errors

July 29, 2013

The Leapfrog Group recently unveiled an online tool that allows employers and purchasers to estimate the amount they pay each year because of unnecessary medical costs, including those caused by hospital errors, accidents, and infections.

Leapfrog's hidden surcharge calculator comes more than a year after the not-for-profit unveiled its letter grades for hospital safety, giving only 729 hospitals an "A." The American Hospital Association—along with many of its members—argues that the methodology Leapfrog uses to generate the letter grades is flawed, Modern Healthcare notes.

The online tool relies on claims data and the group's local hospital rankings to calculate both the total surcharge for hospital errors and the average amount spent on errors per patient admission annually. Leapfrog estimates that a purchaser pays an average of $7,780 in hidden surcharges when a patient is admitted to hospital with a safety grade of "C" or lower.

As such, an employer with 1,000 hospital admissions would pay an estimated $7.7 million surcharge for the year, according to the calculator. However, Leapfrog CEO Leah Binder says the actual surcharges could be higher because the calculator relies on a conservative estimate that purchasers only pay twice what Medicare pays.

"It's counterintuitive and outrageous, but you will pay a lot more for hospitals that have more errors, accidents, and infections," Binder stated in a press release.

The "take-home message," she told Modern Healthcare, is that "[a]t the very least, you're paying millions of dollars for the privilege of harming your employees, when you could be spending this money on plant and equipment" (Landen, Modern Healthcare, 7/25 [subscription required]).

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