Private insurers often link their coverage decisions to CMS and won't pay the costs either. Some states are expanding the no-pay plan to Medicaid also. This means hospitals will pick up the tab for the errors. Since Medicare covers about 44 million elderly and disabled Americans, the rule changes may save the government, and cost hospitals, an estimated $50 million each year.

But the news about reimbursement cuts also brings to mind ongoing efforts by hospitals to implement quality improvement measures to prevent mistakes in the first place. In particular, widespread concerns over hospital-acquired, antibiotic-resistant infection have led to vastly improved procedures for infection control from hand-washing protocols to disinfection plans.


"If an organization doesn't have an infrastructure and culture for taking accountability for these things, it could have a negative financial impact if they sit back and do nothing about [the Medicare cuts]," said Mike Reno, Vice President, St. Luke's Episcopal Hospital, Houston, TX.

St. Luke's has implemented quality improvement programs based on lean manufacturing methods used at Toyota. "It's not about turning patients into cars. It is however, taking proven engineering tactics and applying them to the processes by which we deliver care," Reno said. The Toyota production system uses a basic quality improvement model: plan, do, check, act. It is one of many programs (others include Six Sigma and Total Quality Management) for improving work processes. Such quality improvement methods require careful data collection, self-assessment, staff training, and inter-departmental coordination. The efforts focus on achieving a given outcome, or in this case, avoiding one.

For example, St. Luke's has an electronic system for tracking surgical instruments using identification markers. "Surgeons and scrub nurses can quickly assess intra-operative inventory. Do we have everything out? Did we leave anything behind?.... If a patient does develop a post-surgical infection, we can go back and track which instruments were used. If we have an issue or bacterial positive we can track back to the instrument or sterilizer."

While acknowledging upfront costs of putting quality processes in place to prevent errors, Reno noted, "We fully believe that at the end of the day, this will be a cost savings to our organization and to the industry as a whole because of the reduction in resources utilized during that patient stay.... At it's most fundamental level, this is an effort to further advance quality in healthcare."

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