Dispelling the Myths: The True Cost of Healthcare-Associated Infections

Healthcare Financial Management, March, 2007 by Christopher S. Hollenbeak

Healthcare-associated infections result in 100,000 deaths a year by some estimates. While healthcare executives may recognize the serious threat to patient health that HAIs present, they often aren't aware of the significant financial drain associated with these infections.

In Dispelling the Myths: The True Cost of Healthcare-Associated Infections, the Association for Professionals in Infection Control and Epidemiology examines common misperceptions about HAIs and presents a business case for their prevention. Included are examples of hospitals that have generated significant savings by adopting best practices as well as recommendations for ways hospital leaders can cut HAI-related costs at their own organizations.

As part of its commitment to advancing the financial management of health care, HFMA seeks to inform members and others of educational resources that support improvement of the business performance of organizations operating in or serving the healthcare field. With this in mind, HFMA brings you as part of its to-read list the following highlight from the white paper.

Key Findings

Common myths exist regarding HAIs. Despite what you may have thought:

* HAIs should not be an expected byproduct of treating an older, sicker patient population with an increasing array of invasive techniques. Organizations pursuing elimination programs are finding that HAIs are often preventable through the application of evidence-based guidelines.

* Additional payment or reimbursement typically does not offset the cost of an HAI. Most patients in a hospital are covered by government payers (Medicare and Medicaid), which, in most cases, pay fixed amounts, and the additional costs associated with an HAI must be absorbed by the hospital.

* The number of HAIs in most organizations is significant, making the cost savings associated with reduction of HAIs worth pursuing. A recent study of 1.69 million admissions from 77 hospitals found that patients with an HAI reduced overall net inpatient margins by $286 million--what amounts to $5,018 per infected patient.

With these points in mind, APIC believes pursuing perfection, that is, setting HAI reduction strategies at the theoretical ideal (zero preventable infections) represents a substantial opportunity for hospital leaders to improve safety and quality, and significantly reduce cost.

Why Is This Important?

HAIs extend patient stays, often posing a needless drain on the healthcare organization's capacity. According to the Pennsylvania Healthcare Cost Containment Council, the 1.9 million admissions in its state in 2005 without an HAI had an average length of stay less than five days. For the 24,000 admissions that were reported with an HAI, the average length of stay was 23 days.

Direct savings potential is significant as documented by several organizations that have examined the economic impact of eliminating HAIs using validated economic analysis.

Among these organizations is Pittsburgh-based Allegheny General Hospital.

* AGH used evidence-based best practices and a zero goal to reduce its central-line associated bloodstream infections 90 percent from FY03-04. The hospital went from 49 CLAB infections to three, with an average savings of $14,572 per infection.

* AGH also demonstrated significant reduction in ventilator-associated pneumonias. Results showed a reduction from 46 VAPs in FY03 and 45 VAPs in FY04 to just eight VAPS in FY05. Economic analysis for FY03-05 indicates the average payment for VAP cases totaled $62,883 while the average cost was $87,318; therefore, the average loss for each VAP case was $24,435.

At BJC HealthCare, a 13-hospital not-for-profit system in St. Louis, leadership invested $350,000 to enhance systemwide efforts to eliminate HAIs, specifically targeting CABG surgical site infection, spinal SSI, and bloodstream and YAP infection. Individual hospitals also invested an additional $50,000 to $150,000 to increase FTEs dedicated to infection prevention and/ or medical direction. In 2000, BJC estimated costs from the four infection categories at $8.2 million systemwide. By year end 2001, the same four categories were associated with excess costs of $6.4 million--an almost $2.2 million reduction in excess costs related to increased prevention efforts.

What Will Financial Managers Need to Do?

Based on performance improvement potential and associated savings, financial managers need to work with their organization's leadership to enhance attention and devote resources to reducing HAIs. Specifically, efforts should focus on working with infection prevention and control specialists in your organization to do the following:

* Quantify the economic impact of HAIs in your organization. When conducting this analysis, select a population to be analyzed and identify actual or estimated payment for each case (excluding a case if the primary cause was infection but including readmissions for HAI). Then identify the total costs associated with the case based on activity-based accounting, if available.