Avoidable Medical Errors Rang Up $19.5 Billion Price Tag in 2008

Preventable medical errors cost the US economy $19.5 billion in 2008, according to a new study, which identified pressure ulcers as the most expensive avoidable error.

The report, which was commissioned by the Society of Actuaries (SOA) and completed by consultants with Milliman, Inc., used claims data to provide an actuarially sound measurement of costs for avoidable medical injuries.

Topping out the list of the top five most costly errors—which account for approximately 55% of total error costs—are postoperative infections, mechanical complications of devices, implants, or grafts, postlaminectomy syndrome, and hemorrhages that complicate a procedure.

“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,” says Jim Toole, FSA, CERA, MAAA and managing director of MBA Actuaries, Inc. “While this cost is staggering, it also highlights the need to reduce errors and improve quality and efficiency in American healthcare.”

According to an online report, 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.

Key findings from the study are as follows:

• There were 6.3 million measureable 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, 7% 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.

"In the past, the insurance industry had low visibility in its involvement in quality-improving initiatives," says Toole. "Now is the time for the industry to assume an active role by helping healthcare systems implement an actuarial approach, which can more systematically identify potential causes of medical errors than alternative approaches."