Media attention on hospitals preparedness to contain infection has surged following reports that two healthcare workers at Texas Health Presbyterian Hospital who treated Ebola patient Eric Duncan contracted the virus. But perhaps attention should have been focused on hospitals a lot sooner.
According to data from the Center for Disease Control, or CDC, compiled over the first nine months of last year, all but two states (South Dakota and Wyoming) reported being home to at least one hospital that failed to outperform one or more of the CDC's six infection rate benchmarks.
The worst offenders
Overall, the CDC tracks data on six categories of infections, including those from flexible tubes inserted into veins, catheters that drain bladders, clostridium difficile, methicillin-resistant staphylococcus aureus (MRSA), and two surgical site infections after hysterectomies and colon operations.
Across those six categories, the three states reporting the highest percentage of hospitals failing to beat benchmarks are Connecticut, Nevada, and New Jersey. In Connecticut, 16 of the 30 hospitals included in the CDC data missed the mark at least once, giving it the dubious honor of being the worst state on the CDC's list.
On average, roughly 22% of hospitals nationwide, or 693 of the 3,189 hospitals studied, came up short one or more times and that's disappointing given that hospital infection is a significant cause of death every year. According to Kaiser Health News, roughly one hospital patient in 25 contracts infection and 75,000 people die from infections every year.
Fixing the problem
There's a lot of blame to go around. An argument can be made that the CDC guidelines have been confusing. But in most cases the cause of infection is tied not to guidelines, but a failure to follow them. According to a study conducted in 2011, healthcare providers fail to take the necessary precautions to prevent infection far too often. For example, only between 72% and 82% of healthcare providers used clean gloves when dealing with a patient assigned to contact precautions.
Failing on such basic precautions has gotten the attention of the Centers for Medicare and Medicaid Services, or CMS, which is knee deep in finding ways to reduce spending amid rising demand from aging baby boomers. According to Health and Human Services, spending on hospital-acquired infections results in $33 billion in excess costs annually.
Included in that spending is the cost of drugs, like those made by Cubist (NASDAQ:CBST), to fight these infections. Spending on such medicine has been growing sharply -- in the third quarter, Cubist reported that sales of Cubicin, which is used to treat post-op skin-wound infections, jumped from $230 million last year to $257 million. That means that healthcare payers are spending $1 billion a year on Cubicin alone.
In an attempt to rein in its share of that spending, beginning in October, the CMS will reduce Medicare payments to a quarter of the nation's hospitals because their infection rates are too high. The 1% haircut, which was established as part of healthcare reform, is expected to reduce payments by more than $330 million in the government's current fiscal year.
With 10,000 baby boomers turning 65 daily and hospitalizations tied to age-related disease growing, it will become increasingly important for healthcare payers to push and pull at hospitals to perform better. Although there's no guarantee that penalizing hospitals by lowering Medicare reimbursement will reduce infection rates, given how pervasive hospital infections remain, and the sheer cost associated with treating them, it's unlikely that the status quo will continue.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends Cubist Pharmaceuticals. The Motley Fool owns shares of Cubist Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.