Analysts Skeptical About New Rules For Hospital Errors

"In an effort to improve care and reduce errors, the federal government soon will stop providing money to U.S. hospitals for treatment of certain conditions that arise from medical blunders.

At least eight conditions will be affected. Among them: giving patients the wrong blood type, leaving items inside surgery patients, and causing bed sores through improper care.

The changes appeared in a rule book recently published by the Centers for Medicare and Medicaid Services. The 2,140-page document details hospital payment changes for fiscal 2009, which begins in October 2008.

Medicare's financing arm has said the new rules could save $20 million a year. Some consumer advocacy groups cheer the move, saying it will boost quality and cut costs.

But several Wall Street analysts disagree. They say the punishment for hospitals that don't reduce errors is small, and that threatening to cut $20 million isn't enough to frighten hospitals into compliance.

Typically, private insurers follow Medicare's lead. This means more private insurers also might stop paying extra for conditions caused by goofs. The question is whether this will create more incentive for hospitals to reduce errors."