A new study estimates that measurable medical errors cost the U.S. economy $19.5 billion in 2008.
Commissioned by the Society of Actuaries and completed by Milliman, Inc., the study used claims data to project a measurement of costs for avoidable medical injuries. Of the approximately $80 billion in costs associated with medical injuries, around 25 percent were found to be the result of avoidable medical errors.
“This report highlights a singular opportunity for both improving the overall quality of care and reducing healthcare costs in this country,” said Jim Toole, managing director of MBA Actuaries, Inc. “Of the $19.5 billion in total costs, approximately $17 billion was the result of providing inpatient, outpatient and prescription drug services to individuals who were affected by medical errors. While this cost is staggering, it also highlights the need to reduce errors and improve quality and efficiency in American healthcare.”
Medical errors are a significant source of lost healthcare funds every year. For example, the study found that $1.1 billion was the result of lost productivity due to related short-term disability claims, and $1.4 billion was lost through increased death rates among individuals who experienced medical errors.
Industry observers have argued that the cost of medical errors outweighs the problem of medical malpractice lawsuits.
“Litigation accounts for a miniscule fraction of health costs, small enough to be a rounding error,” said David Arkush, director of the Public Citizen’s Congress Watch division. “Congress … should focus on fixing real problems like the crisis of preventable medical errors.”
A recent SOA survey, which identified ways to bend the national healthcare cost curve, found that 87 percent of actuaries believe that reducing medical errors is an effective way to control healthcare cost trends for the commercial population, while 88 percent believe this to be true for the Medicare population.
“We used a conservative methodology and still found 1.5 million measurable medical errors occurred in 2008,” said Jonathan Shreve, consulting actuary for Milliman and co-author of the report. “This number includes only the errors that we could identify through claims data, so the total economic impact of medical errors is in fact greater than what we have reported.”
The study found that of the 6.3 million measurable medical injuries in the United States in 2008, approximately 1.5 million were associated with a medical error. The average total cost per error was approximately $13,000.
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.
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, post-laminectomy syndrome and hemorrhages complicating a procedure.