Will cost transparency in the operating theatre cause surgeons to change their practice?

Highlights

• Spine surgeons may not have detailed knowledge about costs.

• Detailed instrumentation cost information will reduce costs in the operating room.

• Detailed cost information has no impact on overall costs of admission to hospital.

• There are considerable variations in cost for inpatient care depending on the treating surgeon.

Abstract

Surgeons may not have a thorough knowledge about the costs of devices or surgical equipment. The main reason for this in many systems is price insensitivity. The purpose of this study was to determine whether spine surgical procedural expenses change once physicians are aware of the costs for surgical implants and the total associated costs with the procedure.

A thorough bottom up case costing methodology was used to capture the costs of admission for three comparable spine surgical procedures at a large tertiary care center. Costs were collected for an initial 5-month period where surgeons were not aware of costs, followed by another 5-month period with detailed cost information. Instrumental costs, procedural costs and costs of admission were captured as well as health related quality of life (HRQOL) measures at 3 months. Statistical analysis was undertaken with STATA software.

Costs decreased by $478 for instrumentation once actual prices were known (p = 0.069). Only ACDF procedures demonstrated statistically significant instrumental cost savings of $754 (p = 0.009). Total procedural costs were also less ($297, p = 0.194) but the total overall costs of admission increased ($401, p = 0.228). There were no differences in VAS, EQ-5D, or SF-12 scores.

Although costs decrease for implants in surgery when prices are known, this appears to have little or no effect on overall costs of care. Length of stay and operating room time have greater effects on global costs. Future efforts to encourage efficient cost savings should focus on practice patterns/pathways for similar conditions rather than limiting the use of certain implants.

Introduction

Over the past three decades, health care costs have risen exponentially and as a result continue to consume high percentages of gross domestic product (GDP) in many countries [1], [2]. Although regulatory bodies in many countries have tried to limit health care spending on treatments with a high cost to benefit ratio (cost/QALY), the true driver of medical expenditure likely occurs by decisions made at the bedside [3], [4], [5], [6]. Cost estimation strategies have taken both, “top-down” and, “bottom-up,” approaches with top down approaches dominating with most coverage decisions made by national institutes or large insurance companies [7]. Bottom-up approaches for cost estimation have several advantages including better granularity, transparency and versatility but there is a paucity of evidence evaluating actual bottom-up cost saving strategies and their impact on global costs.

When confronted with cost decision making at the patient level, physicians are often left in a very difficult place, both ethically and practically. For any given condition, there commonly exists a variety of possible treatments and although cost-effective information may exist for each, financial considerations are not generally the main driver of physician decisions. Many health care workers would argue that cost should not enter the decision making process at all; “the right treatment for the patient no matter the cost” [8]. Many physicians feel that they should make the best treatment choices and the decisions of coverage/cost should stay with policy makers [9]. This opinion has begun to change over the past decade, where many physicians now argue that cost should be a consideration in treatment decisions but there is limited evidence that this occurs practically. Physicians will alter their decision making if patients cannot explicitly afford certain treatments, but this may be the only scenario in which cost affects decision making [3], [10], [11], [12]. When an insurance provider or health authority cover numerous treatment options with varying costs, physicians will rarely consider costs [13]. Moreover, physicians are less likely to actually know the costs of different treatments in these scenarios [14], [15].

Price sensitivity is an economic term for how much demand changes relative to price of a certain product or new technology [16]. Technological advances in surgical devices or instruments will often boast more user friendly properties, purport technical advantages from previous versions or reduce time in the operating theater. Often, the price increase may be greater than the proposed advantages. Rarely is surgeon remuneration tied to the choice of implants and this creates a relative insensitivity to the key decision makers or users of instrumentation.

The volume and cost of spinal fusion procedures have increased along with advancements in instrumentation. With rapid innovation, spine surgeons have kept up with the application of the technology but have rarely considered the changing cost/benefit ratio [15], [17], [18]. Further, it is not known whether surgeons would change their choice of implant or fusion device if they were aware of significant cost variation from one treatment to the another. Many facilities deal with single vendors in order to take advantage of larger bulk pricing arrangements and this often leads to a lack of transparency in costs due to confidential price negotiation. Transparency in price is one of the key underpinnings of optimal supply and demand or marginal cost/marginal benefit relationships in free markets [19]. When there is little knowledge of price, it is extremely difficult for surgeons to make value based care decisions.

The global cost of spinal instrumentation is a small part of the overall cost of care for patients. There are estimates demonstrating that this can vary from 2 to 20% depending on the size and complexity of the treatment facility [20], [21]. There have been previous efforts to make surgeons aware of the costs of implants and/or the associated costs with surgery in an effort to decrease costs. These previous attempts have focused mostly on decreasing waste and creating leaner processes to improve flow [22], [23], [24]. There are few studies that evaluate whether surgeons change instrumentation strategies once they are aware of the costs of certain adjuncts and further whether these decisions will have any impact on overall costs for an institution [22]. The purpose of this study was to determine whether spine surgical procedural expenses change once physicians are aware of the costs for surgical implants and the total associated costs with the procedure.