Study: Hospital profits soar when surgeries go wrong

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President Obama's healthcare law includes a provision penalizing hospitals for their readmissions — a penalty designed to encourage hospitals to provide more effective care.

The JAMA study indicates that such incentives could be necessary to reverse hospitals' financial incentives.

Surgical complications not only boost hospitals' revenues, but also their profit margins, the study found. Although complications usually require additional treatments, hospitals' profit margins tripled when a privately insured patient suffered a complication. 

Hospitals' margins doubled for Medicare patients who experienced complications.

The study was conducted by the Boston Consulting Group, which evaluated more than 30,000 surgical procedures at a 12-hospital system.

“This clearly indicates that health care payment reform is necessary. Hospitals should financially gain—not lose—by reducing harm," said Atul Gawande, a professor at Harvard University and a high-profile expert on healthcare costs.