Hospital profitability for a surgeon’s common procedures predicts the surgeon’s overall profitability for the hospital

Abstract

Study Objective: To evaluate whether a hospital’s profitability for a surgeon’s common procedures predicts the surgeon’s overall profitability for the hospital. Design: Observational study. Setting: Community and university-affiliated tertiary hospital with 21,903 surgical procedures performed per year. Patients: 7,520 patients having surgery performed by one of 46 surgeons. Interventions: None. Measurements and Main Results: Financial data were obtained for all patients cared for by all the surgeons who performed at least ten cases of one of the hospital’s six most common procedures. A surgeon’s overall profitability for the hospital was measured using his or her contribution margin ratio ( i.e., total revenue for all of the surgeon’s patients divided by total variable cost for the patients). Contribution margin was calculated twice: once with all of a surgeon’s patients, and second, limiting consideration to those patients who underwent one of the six common procedures. The common procedures accounted for 22 ± 15% of the 46 surgeons’ overall caseload, 29 ± 10% of their patients’ hospital costs, and 30 ± 12% of the hospital revenue generated by the surgeons. Hospital contribution margin ratios ranged from 1.4 to 4.2. Contribution margin ratios for common procedures and contribution margin ratios for all patients were correlated (τ = 0.58, n = 46, p < 0.0001). Conclusions: Even though most surgical cases were for uncommon procedures, a surgeon’s hospital profitability on common procedures predicted the surgeon’s overall financial performance. Perioperative incentive programs based on common surgical procedures (clinical pathways) are likely to accurately reflect a surgeon’s financial performance on their other surgeries.