Medical Errors Costly, Study Finds

A recent Society of Actuaries (SOA) study has found that medical errors are costing at least $19.5 billion each year, nationwide. The SOA report also revealed that 1.5 million <"">medical errors compromise the quality of American healthcare and cause unnecessary waste in the system

The findings from the new study estimate that measurable medical errors cost the U.S. economy $19.5 billion in 2008. Commissioned by the SOA and completed by consultants with Milliman, Inc., the report used claims data to provide an actuarially sound measurement of costs for avoidable medical injuries. Of the approximately $80 billion in costs associated with medical injuries, some 25 percent were 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, FSA, CERA, MAAA and managing director of MBA Actuaries, Inc. said in a statement issued by the SOA. “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 from lost productivity due to related short-term disability claims, and $1.4 billion was lost from increased death rates among individuals who experienced medical errors. According to a recent SOA survey, which identified ways to bend the national healthcare cost curve, 87 percent of actuaries believe that reducing medical errors is an effective way to control healthcare cost trends for the commercial population; 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,” Jonathan Shreve, FSA, MAAA, consulting actuary for Milliman and report co-author, said in the SOA statement. “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.”

Key findings from the study include:

• There were 6.3 million measurable medical injuries in the U.S. in 2008. Of the 6.3 million injuries, the SOA and Milliman estimate that 1.5 million were associated with a medical error.

• The average total cost per error was approximately $13,000.

• In an inpatient setting, seven percent of admissions are estimated to result in some type of medical injury.

• The 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.

The study also identifies the 10 medical errors that are most costly to the U.S. economy each year. 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; postlaminectomy syndrome; and hemorrhages complicating a procedure.

The SOA and Milliman findings were based upon an analysis of an extensive claims database. Measurable costs of medical errors included increased medical costs, costs related to increased mortality rates, and costs related to lost productivity of an error.

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