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Factors Affecting the Cost and Profitability of Arthroscopic Rotator Cuff Repair

Published:November 22, 2018DOI:https://doi.org/10.1016/j.arthro.2018.07.034

      Purpose

      To examine the cost metrics and profitability of rotator cuff repairs (RCRs) in a large health care system.

      Methods

      A retrospective study was performed using value analysis team data from 2 hospitals within a large metropolitan health system from 2010 to 2014. Cost and profit metrics were collected and compared against surgeon volume, surgeon subspecialty training, implant costs, Current Procedural Terminology (CPT) coding, length of stay, and hospital site.

      Results

      A total of 5,899 RCRs were identified with a mean contribution margin of $2,133. Surgical supplies were the largest contributor to direct costs. Hospital site also significantly affected contribution margin ($1,912 at hospital 1 vs $3,129 at hospital 2, P < .001). The number of billed CPT codes was not significantly correlated to contribution margin; however, significant differences were noted in contribution margin and direct cost associated with different CPT code combinations, with arthroscopic RCR with subacromial decompression and distal clavicle excision being the most profitable, at an average contribution margin of $2,147. There was no correlation between surgeon volume and contribution margin or direct cost.

      Conclusions

      Our overall findings show that improvement in the profitability of arthroscopic RCR for hospital systems is possible, both by examining institutions' direct costs and by providing individual surgeons with cost breakdowns and contribution margin information to improve the profitability of their practice.

      Level of Evidence

      Level IV, economic and decision analysis.
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      Linked Article

      • Editorial Commentary: The Ever-changing Landscape of Health Care Economics—“The Future Ain't What It Used to Be”
        ArthroscopyVol. 35Issue 1
        • Preview
          Payment models for orthopaedic services are constantly changing. Rather than have changes dictated to us, it is our responsibility as experts in arthroscopic surgery to advocate for patients and offer our unique insight to governmental agencies and payers. Before we can begin to understand this complex landscape, we need to start at the beginning and master the fundamentals of health care economics: cost-effectiveness analysis, cost minimization, cost benefit, and the like. Failure to do so will mean being left out of a conversation that will ultimately affect our ability to care for patients.
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