What Are the Implications of the Costs of Operating Room Time?

In California, 1 minute of operating room (OR) time costs an average $36 to $37 per minute, according to a study published in JAMA Surgery.

Hospital costs are important to understanding value-based care, and are even more critical when analyzing cost-saving interventions during surgery. Past reports have found that 1 minute in the OR ranges in cost from $7 to over $100 per minute, depending on the location and surgeon. Services performed in the OR account for almost one-third of healthcare spending.

The Office of Statewide Health Planning and Development (OSHPD) in California state requires that all hospitals report their financial metrics on an annual basis. This study used reports from hospitals to evaluate the average cost of 1 minute in the OR, assess variation between hospitals, understand what contributes to cost, and calculate how cost has changed over time when adjusted for inflation. Researchers used a “top-down” strategy in which total expenses were divided into smaller units.

Documents reporting costs were collected from 302 facilities from 2005 to 2014 and included surgery and recovery, and ambulatory surgery procedures. The hospitals included in the study were either for profit, not for profit, or government owned, making up 25.8%, 57.9%, and 16.2% of the hospital population, respectively.

From 2004 to 2015, the data show that OR expenses increased more rapidly than the consumer price index and medical consumer price index. In addition, nonteaching hospitals had a higher increase in economic growth compared to teaching hospitals, which spent about $8 less.

In the inpatient setting, direct costs accounted for 54.6% of total expenses compared to 59.1% in the ambulatory setting. The mean cost of OR time was between $36 to $37 per minute, with $20 to $21 being direct costs. Wages and benefits made up $13 to $14 of the total costs.

A small portion ($2.50 to $3.50) of the total costs account for unbilled supplies, including gloves, packs, and sutures. Researchers believe that this cost can be reduced and result in a decrease of OR costs.

While 1 minute of OR time seems expensive, researchers believe that reducing time spent in surgery will have little effect on the overall price of the operation due to indirect prices.

“These statewide numbers can serve as a benchmark when evaluating intraoperative cost-savings efforts,” the authors concluded. “Finally, understanding the composition of costs will allow those interested in value improvement to identify high-value targets.”

Reference

Childers CP, Maggard-Gibbons M. Understanding costs of care in the operating room. [published online February 28, 2018] AMA Surg. doi:10.1001/jamasurg.2017.6233