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Government Cracks Down on This $1.7-Billion Problem

Newsflash: Sometimes it’s the simplest “why the heck didn’t we think of that before” innovations that produce transformative results and unleash outstanding profit potential.

Take the shipping container, for example. It’s nothing but a glorified metal box – and yet, as I shared two weeks ago, this basic innovation is, hands down, the biggest driver of globalization.

Today, I’m tipping you off to another simple innovation. One that could have a similarly critical impact in the $2.8-trillion healthcare sector.


  1. Because it’s going to solve a problem that costs $1.7 billion per year.
  2. The Centers for Medicare & Medicaid Services (CMS) just guaranteed that around 4,200 hospitals in America are going to be scrambling for solutions before the year is out.

Here’s the scoop…

Never Say “Never”

Each year, over 30 million invasive surgeries are performed in hospitals across the United States.

While many of them go smoothly, I bet you’ll never guess what the most common error is…

It’s not an anesthesia mix-up (too little or too much).

It’s not damage from an errant slip of the scalpel.

And it’s not operating on the wrong part of the patient.

It’s retained surgical items (RSIs).

In other words, doctors leaving surgical instruments or sponges inside patients’ bodies.

Believe it or not, this happens over a dozen times a day, on average!

The most frequent item left behind? The cotton sponges used to soak up blood and other fluids.

Research and government data suggest that cases of retained sponges happen upwards of 6,000 times per year. That represents about 70% of all RSIs.

As you can imagine, there are considerable human and economic consequences for each incident.

Patients carrying retained surgical sponges often suffer from searing pain, digestive problems and infections. Some even die. Studies show that the fatality rate ranges from about 2% to as high as 11%.

Meanwhile, malpractice costs and expenses for additional surgery and hospital visits run upwards of $415,000 per case.

Extrapolate those costs across the country, and we’re talking about $1.7 to $2.5 billion in avoidable expenses every year.

The irony here is that the U.S. Department of Health and Human Services considers retained sponges a “Never Event.” As in, they should never happen.

Medical experts agree. “It’s a recurrent, persistent and nearly totally avoidable problem,” says Atul Gawande, a surgeon at Boston’s Brigham and Women’s Hospital.

So what’s going on?

Sadly, it boils down to economics…

It’s You Versus the Greenback… And You Lose

It’s no secret that hospital budgets are incredibly strained.

But it’s spawned some typically ass-backwards “logic.”

In their minds, it makes better financial sense for hospitals to incur costs from the one or two sponges left behind each year than the alternative solution…

Spending a measly $8 to $15 extra on every operation for technology that prevents RSIs from ever happening.

Technology that “pays for itself [if it prevents] just one error,” says Susan Phillips, UNC Health’s Vice President of Perioperative Services.

In other words, the almighty dollar trumps patient safety.

In this case, however, we can actually thank our government for stepping up to rectify the situation.

One Positive Outcome From Obamacare

In late April, CMS proposed new rules regarding patient safety, as required under Section 3008 of the Affordable Care Act.

Without bogging you down in the minefield of government regulations, here’s the bottom line…

The government wants to cut down on hospital-acquired conditions (HACs). That is, conditions patients didn’t have when they were admitted.

After all, nobody enters the hospital with forceps or sponges already inside their body. (Well, almost nobody!)

So the government is cracking down on HACs by targeting hospitals’ bank accounts. They’re going to hold back reimbursements from the worst offenders. That’s worth $300 million each year.

To determine who’s on the Naughty List, they’re going to rank hospitals across six patient safety measures… including retained surgical items.

CMS is set to issue its final ruling by August 1. And financial penalties will start in fiscal 2015 (beginning in October 2014).

So the clock is officially ticking. Hospitals basically have 16 months to implement improved safety measures. Otherwise, they could find themselves in even more dire financial straits.

That’s where this “boring” innovation comes in…

Tech to the Rescue

When it comes to eradicating retained sponges, there’s a simple solution: technology.

If you’ve been in an operating room recently, you can attest that they’re overrun with technology to assist with care.

Sadly, technology hasn’t extended to proper sponge-counting practices.

In about 85% of hospitals, they’re still counted manually – crossed off a list as each sponge is used and then removed.

It’s a flawed system, prone to simple mistakes.

For example, a 2003 New England Journal of Medicine study showed that 88% of retained sponge cases occurred after a false count.

As in, staff counted that they used 10 sponges and removed 10 sponges… but they really only removed nine.

Whether it’s the stress of the operating room, rotating staff during procedures, or fatigue, it doesn’t matter. It’s clear that we desperately need a better, more accountable system than simple human counting.

As Gawande says, “There are technologies that reduce the risk and the overall cost [to hospitals and insurers].”

Ones that track and count exactly how many items are used in surgical procedures, thus eliminating human error completely.

The question is: In this day and age of high tech, why has it taken us so long to solve such a simple problem?

Ahead of the tape,

Louis Basenese