Ambulatory surgery centers (ASCs) have led the way toward an increased understanding of the true costs of surgical procedures and advanced efforts to minimize such costs. In the ASC environment, surgeons act on the data to decrease costs and increase revenue for the surgery center and its investors. Large hospitals and academic centers have been unable to match either the specificity of the data collection or the cost awareness among surgeons. As a result, the costs of surgery in an ASC versus a large hospital are very different.
Incentives for efforts to minimize costs are clear in the ASC environment (ie, lower costs yield higher take-home pay for surgeons). Although clear incentives or gain sharing undoubtedly helps surgeons with decisions that can control costs in the hospital environment, the importance of transparent, accurate, and detailed cost data cannot be overstated. The following key points may be helpful in controlling surgical costs.
Benchmarking against peers
Orthopaedic surgeons are competitive by nature. Most do not want to be labeled as expensive outliers, making cost comparisons against peers a powerful motivator.
For example, simply knowing that his average case cost for an anterior cruciate ligament (ACL) reconstruction is $2,000 is unlikely to motivate Dr. Jones to change behavior and lower costs. However, if Dr. Jones learns that Drs. Smith and Peters perform the same surgery for a case cost of $1,500, he may want to learn more (and act on this knowledge). Although both blind and open cost sharing seem to motivate, open comparisons are more effective in affecting behavior.
Data must be high quality and tailored to address certain cost issues to result in behavior changes. Unfortunately, clean, comparable data are not easy to obtain in a big hospital environment. Hospital surgery coders and data experts may not recognize all of the material factors that differentiate cases for the surgeon. For example, an ACL reconstruction cannot be compared fairly against an ACL reconstruction with meniscus repair, even though both use the same primary code. Imprecise data are less effective in changing behavior.
Additional considerations include operating room (OR) time (because time spent in the OR is a cost center) and reimbursement data. Although these data are valuable, our group has found that pure cost per case data are most important.
Orthopaedic surgeons have become increasingly agile with balance sheets and OR data reports. To make meaningful comparisons, cost comparison data must draw from a sufficient volume of cases.
Although a busy orthopaedic surgeon with a practice focus in sports may perform a sufficient number of isolated ACL reconstructions in 6 months for a valid cost comparison to be made, an orthopaedic surgeon in a general practice may require a considerably longer time to amass a similar number of surgeries. Data gatherers must be patient in assembling a sufficient number of cases to allow such comparisons.
Cost scrutiny is most beneficial when considering high-volume, high-cost surgeries such as ACL reconstructions, rotator cuff repairs, and distal radius fracture repairs. Other surgeries simply do not lend themselves to scrutiny because so few cases are performed over time.
Expenses that make a difference
Some frequently performed surgeries are not high cost centers and do not vary significantly among surgeons. Two examples are carpal tunnel release and knee arthroscopy with meniscal débridement. Although both are high-volume cases and will be valued in a busy surgical center environment, they are relatively low expense cases with little variability or change over time. Costs for such surgeries should be tracked, but once they are appropriately streamlined, these surgeries offer less opportunity for additional cost savings.
At our outpatient surgery center, we initially compiled an overall dollar figure for case costs to use as a general performance measure for the center. But we found that this figure is not an effective proxy for surgeon cost control performance because case mix and expensive, outlier cases can cause this average to vary dramatically.
For example, an increase in rotator cuff repair surgeries concurrent with a decrease in carpal tunnel release surgeries will increase overall case costs. Similarly, one additional allograft case each month can skew cost data, given the relatively high costs of these implants.
A strategy of carefully following the 10 most commonly performed cases has proven more valuable for our group. Cost changes in these surgeries provide powerful insights. Although cases may vary in difficulty and the need for associated procedures, over time, the high volume of these cases will make the data comparable and instructive. For an even better comparison over time and between surgeons, a subset of matched isolated cases can be evaluated.
In addition to sharing case cost data for each surgeon, we also provide a list of the most commonly used OR supplies. The cost of each item is compared against the previous 2 years. For example, the total cost and the average dollar per case attributable to “suture anchors” is listed for 3 years on the surgeon’s annual report.
These numbers can be eye-opening because such items are quite expensive. The report helps raise awareness of inflationary factors, manufacturer price increases, and the impact of surgeon-led choices, such as a switch to the latest, greatest (and more expensive) suture anchor. These data have helped raise awareness of both overall and detailed costs, and this knowledge has affected behavior.
Almost every procedure requires the use of a basic surgical pack (draping, towels, irrigation bowl, marking pen, and so forth). Because pack costs may range from $50 to more than $100, surgical packs are one of a busy ASC’s biggest line items. By making surgeons aware of the pack contents, our group has been able to identify extraneous supplies and streamline the contents to reduce costs. Although decreasing a pack cost by 10 dollars may not seem significant, when such costs are magnified over several thousand cases, the savings dollars become notable.
The next step
Cost control will remain a priority in orthopaedic surgery; the challenge will be to limit costs while maintaining quality and outcomes. By providing surgeons with highly accurate, detailed, and transparent cost data, hospitals and ASCs can positively affect behavior and limit costs over time.
Charles A. Goldfarb, MD, is a member of the AAOS practice management committee and an associate professor and co-chief of hand and wrist services at Washington University in St. Louis. He can be reached at firstname.lastname@example.org
- Accurate, meaningful data can help surgeons make decisions that can reduce healthcare costs while maintaining quality outcomes.
- Benchmarking costs against their peers can be an incentive for surgeons to reduce costs.
- Providing surgeons with cost information, including cost changes over time, for supplies and materials can affect surgeon-controlled choices and result in lowered costs.