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The Economics of Sepsis

The Economics of Sepsis

The toll of sepsis expands further than human life. There’s a significant economic impact, as well. Here’s what one expert says is the shocking truth about the real cost of sepsis.

1,000,000. That’s how many people are stricken with sepsis in the US each year. Of that number, 270,000 tragically die[1]. Sepsis, without question, is one of the most devastating conditions that can happen to a patient. What many may not realize, however, is the additional devastation that goes beyond the patient – and the harrowing economic implications it has on institutions, as well.

How much is it really?

There are several important statistics to keep in mind when learning about sepsis. Here are a few stats that are of importance to note:

  • There is a 12% increase of mortality for every hour that sepsis goes unnoticed[2]
  • Approximately 25% of sepsis cases are in-hospital acquired[3]
  • Mortality rates for septic shock range from 30% to 50%[4]

Sepsis can cost as much as $18,000 per bed each year – much of that without reimbursement. That means hospitals have to account for a significant amount of their finances, knowing many of these patients won’t survive. But is that the total cost? And what else should hospitals consider?

Meet David Kulick. Kulick has been looking into the cost of sepsis and says most institutions recognize that sepsis is expensive. What is surprising, he maintains, is that most are unclear about the weight of that impact. Why? Because hospital cost centers often make it difficult to get accurate – and complete - information.

“Cost centers span across operational areas, service lines, or physical facilities,” he says. “If you ask, ‘What is the cost of sepsis?’, you might get costs vs. time in bed.  But in reality, you have to consider other costs. In an economic model, it means you have to incorporate other things that are relatively obscure from an economic healthcare perspective.”

The other things to consider, Kulick says, are savings, avoidance, and reimbursements.

Hospitals that don’t understand cost? While it may sound hard to believe, Kulick says many groups focus on various parts of cost but may not zoom out to see the entire picture. For example, hospitals routinely look at differential staffing approaches by disease or condition but can miss other factors that are in play.

“When you have sepsis, you aren’t ‘in’ a service line,” he explains. “Instead, you have hospital intervention, mechanical ventilation costs, supplies – people are moving across a ton of situations. And then there are indirect costs, too – litigation, quality improvement… and anytime you have quality, you have a quality improvement function at the hospital looking at that case. They need to think about all the people on the back end.” 

Cost Structures

What’s also important to consider, Kulick says, is that hospital economics are built on both revenue and cost centers. The issue, however, is that cost centers are not structured by diseases – and diseases aren’t specific to cost centers.

“Maybe you’re looking at cancer, but not everything sits in a cancer service line,” he says. “If a patient needs infusion or surgery – how do you assess the cost when it’s touching costs from other groups?”

Power of Points

Further complicating the matter is that some hospitals lose reimbursement percentage points if they have too many dings on hospital-acquired conditions. For under performers, this can mean penalties.

“If you’re in the bottom quartile, you can lose one percentage point off of Medicare payments,” Kulick explains. “It’s not just for sepsis. It’s a contributing factor to the hospital across their bottom line. What this means is that organizations may suffer overall by not addressing their entire sepsis protocol. It’s expensive.”

The Bottom Line

The cost of sepsis plus the relatively low reimbursement rates can make sepsis an economic nightmare. Statistics, while sobering, offer the unique opportunity to learn and adjust for the future.

“Now’s the time to look at sepsis, with eyes wide open,” concludes Kulick. “The issue of sepsis is a big one – reimbursement, costs, mortality rates and other factors contribute to how this devastating condition is disabling our healthcare system. Knowing how badly it’s hurting us is the first step. Now it’s time for partnerships like GE-Roche to help develop actionable solutions.”

 

About David Kulick, MPH

David Kulick is founder and Managing Director of The Focus Group Consulting. He is an innovation and commercialization expert.

David earned his MPH from Tulane University, Bachelors in Chemistry from the University at Buffalo. Early in his career he worked on the ground with communities and vulnerable populations as an AmeriCorps Volunteer and then with the U.S. Peace Corps in South Africa. David has worked in a variety of contexts on healthcare implementation and development on the Global scale including education-technology projects in India, on health technology Ebola response with the WHO in West Africa, and on HIV/AIDS technology projects in sub-Saharan Africa with USAID.​ 

David has worked for the last eight years as a healthcare consultant focusing on population health, high impact innovation, earned revenue generation, and commercialization.

 

REFERENCES:

[1] CDC, 2019

[2] Seymour CW, Gesten F, Prescott HC, Friedrich ME, Iwashyna TJ, Phillips GS, et al. Time to treatment and mortality during mandated emergency Care for Sepsis. N Engl J Med. 2017;376(23):2235–44.

[3] Paoli CJ, Reynolds MA, Sinha M, Gitlin M, Crouser E. Epidemiology and Costs of Sepsis in the United States-An Analysis Based on Timing of Diagnosis and Severity Level. Crit Care Med. 2018;46(12):1889–1897.

[4] Daviaud F, Grimaldi D, Dechartres A, et al. Timing and causes of death in septic shock. Ann Intensive Care. 2015;5(1):16