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A Tool to Determine Financial Impact of Adverse Events in Health Care: Healthcare Quality Calculator

Yarbrough, Wendell G. MD, MMHC*; Sewell, Andrew MD; Tickle, Erin MMHC, BSN, RN; Rhinehardt, Eric BA, MTS, MMHC; Harkleroad, Rod MMHC, BSN§; Bennett, Marc MD; Johnson, Deborah MMHC, M.Ed, CHC, RHIT, CCS-P; Wen, Li MS; Pfeiffer, Matthew BFA; Benegas, Manny JD; Morath, Julie RN, MS#

doi: 10.1097/PTS.0b013e318298e916
Original Article

Objectives Hospital leaders lack tools to determine the financial impact of poor patient outcomes and adverse events. To provide health-care leaders with decision support for investments to improve care, we created a tool, the Healthcare Quality Calculator (HQCal), which uses institution-specific financial data to calculate impact of poor patient outcomes or quality improvement on present and future margin.

Methods Excel and Web-based versions of the HQCal were based on a cohort study framework and created with modular components including major drivers of cost and reimbursement.

Results The Healthcare Quality Calculator (HQCal) compares payment, cost, and profit/loss for patients with and without poor outcomes or quality issues. Cost and payment information for groups with and without quality issues are used by the HQCal to calculate profit or loss. Importantly, institution-specific payment and cost data are used to calculate financial impact and attributable cost associated with poor patient outcomes, adverse events, or quality issues. Because future cost and reimbursement changes can be forecast, the HQCal incorporates a forward-looking component. The flexibility of the HQCal was demonstrated using surgical site infections after abdominal surgery and postoperative surgical airway complications.

Conclusions The Healthcare Quality Calculator determines financial impact of poor patient outcomes and the benefit of initiatives to improve quality. The calculator can identify quality issues that would provide the largest financial benefit if improved; however, it cannot identify specific interventions. The calculator provides a tool to improve transparency regarding both short- and long-term financial consequences of funding, or failing to fund, initiatives to close gaps in quality or improve patient outcomes.

From the *Yale University, Department of Surgery, Division of Otolaryngology/ENT, New Haven, CT; †Yale University, School of Medicine, Department of Psychiatry, New Haven, CT; ‡Vanderbilt University, Nashville, TN; §Life Point Hospitals, Carthage, TN; ¶Health Information Associates Inc., Pawley’s Island, SC; ∥Interactive Strategy, IASIS Healthcare, Franklin, TN; and #Hospital Quality Institute, California Hospital Association, Sacramento, CA.

Correspondence: Wendell Yarbrough, MD, Professor and Chief, MMHC, Yale University, Department of Surgery, Division of Otolaryngology/ENT, 800 Howard Avenue, Fourth Floor, New Haven, CT 06519-1369. (e-mail:

The authors disclose no conflict of interest.

© 2014 by Lippincott Williams & Wilkins