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How Safe Is Our Health Care System?

Cost/Benefit Equation


Janet Corrigan, M.B.A., Ph.D., Director, Division of Health Care Services, Institute of Medicine (IoM), Washington, DC.

Janet Corrigan underscored the seriousness of the problem of medical errors and the business case for action by providers, policymakers, and consumers.

Chapter 2 of the IoM Report goes into great detail regarding the growing evidence and consistent message that medical errors are occurring at an alarming rate. In addition to the two large studies used by IoM to extrapolate current rates, the committee reviewed more than 30 other studies, all of which corroborated the seriousness of the problem. Although variability may exist across geographic areas, the burden should be on areas claiming lower medical error rates to document that they do not mirror those in the study.

Generally, the belief is that IoM estimates may be an undercount, because they represent only hospitalized patients and only errors recorded in the medical record.

There is a growing momentum around the issue of medical errors.

  • In 1996, the Annenberg Conference brought together the leadership from the American Medical Association (AMA), Joint Commission on Accreditation of Healthcare Organizations (JCAHO), and others. Recognizing the serious and growing nature of the problem, this conference led to the establishment of the American Patient Safety Foundation.
  • In 1998, President Clinton endorsed the recommendation of the Advisory Commission on Consumer Protection and Quality that improving patient safety and reducing errors be recognized as a top national priority.
  • In October 1998, eight leaders in the medical community published an editorial in the Journal of the American Medical Association, a publication of mainstream medicine, indicating that the problem could no longer be ignored.

A strong business case can be made as well for focusing on medical errors. Costs to the country for medical errors range from $17 to $29 billion. About one-half of those costs represents direct healthcare expenditures; the other half includes indirect costs, such as lost productivity and lost household productivity.

Who Pays for Medical Errors?

  • Injured patients pay a very high price for medical errors, sometimes death or lifelong disability.
  • Purchasers of health insurance pay for medical errors in the form of higher premiums.
  • Business pays in the form of higher costs of production, and workers pay in the form of lower wages/benefits.
  • State and local governments pay in the form of high costs associated with various social programs that provide services to individuals with long-term illness or disability.

Medical errors erode consumer confidence in the healthcare system. Although difficult to measure, medical errors contribute to a lower quality of life in a community. Hospitals and other healthcare organizations play important roles in a community. An important contributor to quality of life in any community is a sense of confidence that the healthcare system is safe and effective.

What Can Be Done about Medical Errors?

Many other industries have had safety problems that they have solved. Much of the knowledge and technology exists to tackle this problem. The IoM Report calls for the creation of voluntary and mandatory systems of reporting, recognizing that it is difficult to satisfy all goals under the same system.

  • Voluntary reporting is intended to address the less serious of medical errors, where major harm has not resulted but where there is an opportunity to avoid future problems in the same area and to alert others. Most errors will fall in the category of voluntary reporting. Information obtained through voluntary reporting is primarily focused on quality improvement and determining where patterns of errors can be corrected through education and training and improved system design.
  • Mandatory reporting represents a narrow band of errors that result in death or serious harm to a patient. Mandatory reporting plays a role in accountability when the most egregious of errors occur and where remedial action is essential. Information from mandatory reporting should be available to the public because its overriding purpose is accountability.

The IoM recommends that States serve as the focal point for mandatory reporting. States will need support to build the infrastructure necessary to do this work. Development efforts will be needed in standardizing definitions and report formats and training and convening functions within and across States.


Bates DW, Spell N, Cullen DJ, et al. The cost of adverse drug events in hospitalized patients. JAMA 1997;277(4):307-11.

Leape LL, Woods DD, Hatlie MJ, et al. Promoting patient safety by preventing medical error [editorial]. JAMA 1998; 280(16):1444-7.

Thomas EJ, Studdert DM, Newhouse DJ, et al. The cost of medical injuries in Utah and Colorado. Inquiry 1999 Fall;277:255-64.

Additional Resource

How Safe is Our Health Care System? What Can States Do to Improve Patient Safety and Reduce Medical Errors (

A series of National Audio Teleconferences were sponsored by the User Liaison Program, Agency of Healthcare Research and Quality (AHRQ), to help inform the issue of State's initiatives to reduce medical errors. Audio files and written transcripts are provided for each of the three sessions.

Current as of August 2000

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Internet Citation:

How Safe Is Our Health Care System? What States Can Do to Improve Patient Safety and Reduce Medical Errors. Workshop Brief, User Liaison Program, March 20-22, 2000. Agency for Healthcare Research and Quality, Rockville, MD.

The information on this page is archived and provided for reference purposes only.

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