Reducing Surgical Costs

By December 14, 2016Commentary

Surgeries account for a significant amount of health spending.  Surgeons may often be unaware of the total costs associated with a surgery, such as supply, instrument and equipment expenses.  Research carried in the Journal of the American Medical Association Surgery examined whether providing surgeons with a scorecard and feedback on the total costs of surgery could help sensitize them to such costs and ultimately lower them.   (JAMA Surgery Article)   There were about 50 million surgeries in the US in 2010, with a cost of about $175 billion.  Costs related to the operating room–supplies, instruments, etc.–are about 40% of those costs.  Physician preference can influence the level of these costs, although doctors are often unaware of the cost differences.  This research used a multi-hospital system as the setting for an intervention to reduce overall surgical costs by giving surgeons detailed information on costs.  The intervention was delivery of a monthly scorecard to each surgeon showing the median cost for disposable and implantable items for each procedure type performed by that surgeon in the month, compared with all the health system surgeons performing that surgery.  It also included data on the top ten most expensive items, the top ten most frequently used items and the top ten opportunities for maximum cost savings.  All surgeons in some departments received the intervention, and all surgeons in some other departments did not.  The surgeons in the intervention group also received educational sessions about the scorecards and cost reductions.  There was a departmental financial incentive for cost reduction as well.

Median supply costs per case declined by 6.5% in the intervention group, while rising 7.2% in the control group of surgeons.  This was a total spending difference of almost $4 million.  Head and neck and orthopedic surgeons showed the greatest cost reductions.  Looking at quality measures, there were no significant differences in 30-day readmissions between the intervention and comparison groups, while mortality actually declined in the intervention group.  Interestingly, about 14% of surgeons in the intervention group reported that they didn’t really look at the scorecards, and 24% said they didn’t use the information to affect supply decisions.  Thanks for caring.  Although this intervention may help a hospital reduce costs, it is not clear how much would be passed on to payers and how much just retained as profit.  It is clear that reimbursement reductions can be used as a spur to force hospitals to work harder to create these kind of efficiencies and cost reductions.  And of course, surgeons’ charges and income levels remain a significant contributor to overall surgical spending and little is being done to examine and potentially reduce those.

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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