Profiting From Harm: Hospitals and Medical Mistakes

An in-depth study recently published in the Journal of the American Medical Association (JAMA) found that hospitals profit when patients suffer from complications or errors after surgery. The reason for this is quite simple: complications and errors mean more tests, procedures, and lengthier hospital stays, all of which can be billed to patients’ insurance or Medicare.

The JAMA study examined approximately 35,000 surgical cases and discovered that people with private insurance who experienced surgical errors or complications increased hospital profit margins by 330%. And when it came to Medicare patients experiencing surgical problems or mistakes, hospitals increased their profits by 190%.

This is very troubling data, especially since it comes on the heels of other reports of practices in the medical field that cause harm to patients. Recent research in peer reviewed journals has found the following:

  • Approximately 1 of every 6 deaths in the U.S. is caused by preventable hospital mistakes. Ten to twenty times that many patients will survive the mistakes but have severe injuries. In total, well over 400,000 patients are killed in hospitals annually by preventable errors, and millions of patients suffer serious harm from these mistakes.
  • When physicians become aware of mistakes made by other physicians, these errors are seldom reported or even brought to light. In fact, one study found that 86% of medical errors that occurred were never reported.
  • Multiple studies have found that when hospitals identify preventable errors that are occurring at their institutions, they seldom implement new policies to keep the errors from recurring.
  • When mistakes made by physicians actually are reported (i.e., the physicians’ hospital/clinical privileges were restricted or revoked), most state medical boards do not take any actions against these physicians. This means that these doctors are free to practice medicine anywhere in the state because their medical licenses remain intact.

When these studies circulated through the media, people were left wondering why hospitals are becoming less safe. With so much money spent on research to detect preventable hospital errors and to uncover policies (or lack thereof) that harm patients, something should be done to prevent the needless harm and deaths of hundreds of thousands of patients.

But implementing new policies throughout a hospital is costly. When hospitals profit from mistakes and errors, what becomes the incentive for implementing policies to reduce preventable errors? Certainly, the incentive should be less patient injury and death. The sad fact is that hospitals are aware of the troubling research and most have done absolutely nothing to change policies and prevent deadly errors.

This research and inaction on behalf of hospitals nationwide raises many questions. Should the federal government use their power to force hospitals into implementing policies to reduce errors? This would only work for Medicare patients. Pushing hospitals to improve the level of care for privately insured patients would be much more difficult. Perhaps tough legislation could affect change in hospital policies and reduce preventable errors. But the road to this type of legislation would certainly be paved by opposition from the well-financed pro-hospital lobbyists. Still, this type of legislation is possible if the troubling research about the medical field is kept in the media and patient advocacy groups join forces to advocate for life-saving hospital legislation.

Patient Advocacy

The responsibility to reduce and prevent errors while providing care falls on the medical providers. They must follow standards of care and identify any risk factors a patient may have in order to address problems before they occur. However, patients can also advocate for themselves. Mistakes, especially birth injuries, can be prevented. 

Information is a powerful tool, and our birth injury firm is committed to providing resources for patients, especially for parents, parents of children with disabilities, and pregnant mothers. We have you covered with our answers to frequently asked questions. Some may help you understand the rights you have as a patient in the hospital, such as informed consent or obtaining medical records following childbirth.

Get Legal Help 

ABC Law Centers is a national birth injury law firm that has been helping children for over two decades. Jesse Reiter, attorney and president of the firm, has been focusing solely on birth injury cases for 25 years. He has consistently been recognized in U.S. News and World Report “Best Lawyers in America” publication for personal injury and medical malpractice in Troy, Michigan. U.S. News and World Report also recognized ABC Law Centers in their “Best Law Firms” publication. The lawyers at ABC Law Centers have won numerous awards for their advocacy of children and are members of the Birth Trauma Litigation Group (BTLG) and the Michigan Association for Justice (MAJ).

If you suspect there was malpractice involved in your child’s birth,  we can help. We have helped children throughout the country obtain compensation for lifelong treatment, therapy and a secure future, and we give personal attention to each child and family we represent. Our nationally recognized firm has numerous multi-million dollar verdicts and settlements and no fees are ever paid to our firm unless we win your case. Contact us today for a free case evaluation.


  1. JAMA: Relationship Between Occurrence of Surgical Complications and Hospital Finances
  2. JAMA: A new, evidence-based estimate of patient harms associated with hospital care
  3. Gallagher, Thomas H., et al. “Talking with Patients about Other Clinicians’ Errors.” New England Journal of Medicine 369.18 (2013): 1752-1757.
  4. DHHS: Adverse events in hospitals: national incidence among Medicare beneficiaries
  5. State medical boards fail to discipline doctors with hospital actions against them
  6. Woolf, Steven H., et al. “A string of mistakes: the importance of cascade analysis in describing, counting, and preventing medical errors.” The Annals of Family Medicine 2.4 (2004): 317-326.

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