OR costs: $15-$20 per minute? Where does this come from?

The Becker’s item

I saw this intriguing factoid in a recent brief article and got interested in tracking it back to the source:

• “…there is little published, formal data on true OR costs…As a result, hospital administrators often deploy a ballpark to answer that question, ranging from $15 to $20 per minute for a basic surgical procedure, according to research from Stanford University School of Medicine.”

Source: Gamble, M.  6 cornerstones of operating room efficiency: best practices for each.  Becker’s Hospital Review;2013(2):42, 44, Feb. 2013.  Click here for full text: http://www.beckershospitalreview.com/or-efficiencies/6-cornerstones-of-operating-room-efficiency-best-practices-for-each.html 

The Stanford Article

The next step in the trail is this article that does come from a professor at the Stanford School of Medicine:

• “There are no published formal data on true OR costs.  Excluding physician costs, OR administrators may use a ballpark number such as $15 or $20 per OR minute for a basic surgical procedure, with at least half of that figure being fixed overhead costs.”
• But this quote is really based on an older article (see the Park & Dickerson article below)

Source: Macario, A.  What does one minute of operating room time cost?  Journal of Clinical Anesthesia;22:233-236, 2010.  Click here for full text: http://ether.stanford.edu/asc/documents/management2.pdf

The Park & Dickerson Article (2009) — affiliated with Ohio State

• This is the end of the trail for me — could not find a free full text copy of this article.  I’d be curious if you have access to it! 

Source: Park, K.W., and Dickerson, C.  Can efficient supply management in the operating room save millions?  Curr Opin Anaesthesiol;22:242-248, 2009.  Can purchased full text copy here: http://journals.lww.com/co-anesthesiology/Abstract/2009/04000/Can_efficient_supply_management_in_the_operating.17.aspx  Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

How Many Hospitals Have Negative Margins?

Nearly a quarter [24%] of hospitals in the U.S. had negative total margins in fiscal year 2011, where total expenses exceeded total net revenue. Another 4.4% had negative operating margins. Over the past 20 years, the percentage of hospitals operating at a loss on total margin has fluctuated from a low of 19.4% in 1996 to highs over 32% in both 1999-2000 and again in 2008.

Source: Table 4.1: Aggregate total hospital margins, operating margins, and patient margins; Percentage of hospitals with negative total margins; and Aggregate non-operating gains as a percentage of total net revenue, 1991-2011. In: Trendwatch Chartbook 2013. American Hospital Association, Feb. 26, 2013. http://www.aha.org/research/reports/tw/chartbook/2013/table4-1.pdf  Chart: http://www.aha.org/research/reports/tw/chartbook/2013/chart4-1.pdf

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

How Hospital Costs Are Distributed by Payer Type

For fiscal year 2011, hospital costs were distributed among payers this way:

• Medicare: 39.3%
• Private payer: 34.6%
• Medicaid: 16.3%
• Uncompensated care: 5.9%
• Non-patient [cafeterias, parking lots, gift shops & other non-patient care services]: 2.1%
• Other government: 1.8%

The private payer share has declined from 41.8% in 1980.

Source: Chart 4.5: Distribution of hospital cost by payer type, 1980, 2000, and 2011. In: Trendwatch Chartbook 2013. American Hospital Association, Feb. 26, 2013. http://www.aha.org/research/reports/tw/chartbook/2013/chart4-5.pdf

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

National Trend Data on Hospital Uncompensated Care, FY1980-2011

The American Hospital Association has updated its annual trend data on hospital uncompensated care. In fiscal year 2011, hospitals provided $41.1 billion of uncompensated care, including both bad debt and charity care. This representeded 5.9% of overall hospital expenses.

Source: Uncompensated hospital care cost fact sheet. American Hospital Association, Jan. 2013. http://www.aha.org/content/13/1-2013-uncompensated-care-fs.pdf

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

Costs for Hospital Stays in the U.S. for 2010

Numbers have been released by the Agency for Healthcare Research and Quality on costs for hospital stays in 2010. Here are some highlights from the briefing:

• Average cost for a hospital stay was $9700, with a total national tab of $375.9 billion in 2010.
• Adults age 45 and over accounted for about two-thirds of total national hospital costs
• Circulatory conditions accounted for the biggest share of hospital costs – nearly one-fifth.
• Septicemia was the most costly condition on an aggregate basis, totaling $17.1 billion for the year.

Source: Pfuntner A and others. Costs for hospital stays in the United States, 2010. HCUP [Healthcare Cost and Utilization Project] Statistical Brief [Agency for Healthcare Research and Quality], no. 146, Jan. 2013. http://www.hcup-us.ahrq.gov/reports/statbriefs/sb146.pdf

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

ICU costs are more than twice that of non-ICU inpatient care

Costs in intensive care units in four Banner Health (Phoenix) hospitals in the last half of 2007 were studied.  The daily ICU direct variable cost was found to average $1,597 compared to $683 for other inpatients not in ICU.  The average cost of the entire stay was $6,488 for the ICU, compared to $2,833 for other inpatients.  The types of expenditures were also analyzed:

ICU spend by type

• 56.2% labor
• 15.9% pharmacy
• 8.9% respiratory therapy
• 7.3% lab/blood

The authors also analyzed the difference in cost between low-acuity, mid-acuity, and high-acuity ICU patients. 

What I like about this article: It’s always interesting to see data on cost and utilization of intensive care units. 

Source: Dahl, D., and others.  The high cost of low-acuity ICU outliers.  Journal of Healthcare Management;57(6):421-433, Nov./Dec. 2012.  Click here for more information: http://www.biomedsearch.com/article/high-cost-low-acuity-ICU/311499617.html  Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

 

How can hospitals get ready for Medicare cuts?

Reimbursement cuts that will result from the implementation of the Affordable Care Act (ACA) will have a significant impact on hospitals.  These across-the-board reductions in Medicare payments could result in decreases of an estimated $6.5 million per hospital per year — for the next 10 years.  The author discusses a number of possible options for providers in dealing with the change in the financial environment:

• Stop taking new Medicare patients — or Medicare patients at all
• Layoff employees
• Tighten up operational efficiency
• Take advantage of government subsidies available for purchase of electronic health records

Source: Perez, K.  Preparing for ACA-driven Medicare cuts.  HFM. Healthcare Financial Management;67(1):40-43, Jan. 2013.  Click here for publisher’s website: http://www.hfma.org/Content.aspx?id=14873  Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

Hospital 30-Day Readmission Rates and Costs by Diagnosis or Procedure

The Agency for Healthcare Research and Quality has added 30-day readmission rates for all patients to its Healthcare Costs and Utilization Project online tool, HCUPnet. Data for 2009 and 2010 are now available. Quick national statistical tables can be viewed or downloaded that include the type of diagnosis or procedure, total index volume and average cost per hospital stay for each diagnosis/procedure, and the number and rate of readmissions that occurred.  The average readmission cost is also included in each of the reports below based on different classification systems used:

• Diagnoses – (Clinical Classifications Software)
• Procedures – (Clinical Classifications Software)
• Diagnosis Related Groups (DRGs)
• Major Diagnostic Categories (MDCs)

Using the Readmission Summary Tables option, the web site also generates more detailed reports for individual diagnoses and procedures selected. These reports include patient demographics — age, gender, type of insurance coverage, income status, and urban or rural residence. Causes for the readmissions are also listed. Another nice feature: tables can be downloaded to Excel.

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

ADVERSE DRUG EVENTS: Add $3,000 and 3.1 days ALOS

On average , adverse drug events (ADEs) add $3,000 to the cost of care of patients in community hospitals and just over 3 days to their length of stay, according to this study of 6 mid-sized hospitals in Massachusetts.  This research article (coming out of Brigham & Women’s Hospital in Boston) provides comparative data on preventable and nonpreventable ADEs, as well as comparing patients with significant, serious, and life-threatening ADEs.

Source: Hug, B.L., and others.  The costs of adverse drug events in community hospitals.  The Joint Commission Journal on Quality and Patient Safety;38(3):120-126, Mar. 2012.  Click here for publisher’s website: http://www.ingentaconnect.com/content/jcaho/jcjqs/2012/00000038/00000003/art00004 Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

HOSPITAL COSTS: Supplies and devices drive up costs

Medical technology in the category “supplies and devices” was found to be the key driver in the increase in cost of inpatient hospital care in this study comparing 2001 and 2006 data from the Agency for Healthcare Research and Quality (AHRQ) Healthcare Cost and Utilization Project State Inpatient Databases.  This category alone accounted for 24.2 percent of the increase in average cost per discharge.  Changes in intensive care unit cost of care accounted for another 17.6 percent.

Source: Maeda, J.L.K., Raetzman, S.O., and Friedman, B.S.  What hospital inpatient services contributed the most to the 2001-2006 growth in the cost per case?  HSR. Health Services Research;47(5):1814-1835, Oct. 2012.  Click here for publisher’s website: http://onlinelibrary.wiley.com/doi/10.1111/hesr.2012.47.issue-5/issuetoc Posted by AHA Resource Center, (312) 422-2050, rc@aha.org