The Financial Incentive for Hospitals to Prevent Nosocomial Infections Under the Prospective Payment System: An Empirical Determination From a Nationally Representative Sample

To clarify the financial incentives for hospitals to prevent nosocomial infections, we analyzed 9423 nosocomial infections identified in 169526 admissions selected randomly from the adult admissions to a random sample of US hospitals. By classifying each admission into a baseline diagnosis related group (DRG) (after first excluding all diagnoses of nosocomial infection) and a final DRG (after including these diagnoses), we found that only 5% to 18% of nosocomial infections would have caused the admission to be reclassified to a higher-paying DRG, depending on the extent to which physicians recorded nosocomial infection diagnoses in patients’ medical records. The extra payment from the reclassification, averaged over all nosocomial infections, would have been no more than $93 per infection (in 1985 reimbursement rates), constituting only 5% of the hospitals’ costs for treating these infections. Thus, at least 95% of the cost savings obtained from preventing nosocomial infections represents financial gains to the hospital.