Economic Viability of Geriatric Hip Fracture Centers

Abstract

Management of geriatric hip fractures in a protocol-driven center can improve outcomes and reduce costs. Nonetheless, this approach has not spread as broadly as the effectiveness data would imply. One possible explanation is that operating such a center is not perceived as financially worthwhile. To assess the economic viability of dedicated hip fracture centers, the authors built a financial model to estimate profit as a function of costs, reimbursement, and patient volume in 3 settings: an average US hip fracture program, a highly efficient center, and an academic hospital without a specific hip fracture program. Results were tested with sensitivity analysis. A local market analysis was conducted to assess the feasibility of supporting profitable hip fracture centers. The results demonstrate that hip fracture treatment only becomes profitable when the annual caseload exceeds approximately 72, assuming costs characteristic of a typical US hip fracture program. The threshold of profitability is 49 cases per year for high-efficiency hip fracture centers and 151 for the urban academic hospital under review. The largest determinant of profit is reimbursement, followed by costs and volume. In the authors’ home market, 168 hospitals offer hip fracture care, yet 85% fall below the 72-case threshold. Hip fracture centers can be highly profitable through low costs and, especially, high revenues. However, most hospitals likely lose money by offering hip fracture care due to inadequate volume. Thus, both large and small facilities would benefit financially from the consolidation of hip fracture care at dedicated hip fracture centers. Typical US cities have adequate volume to support several such centers.