Orthopaedic Traumatology: The Hospital Side of the Ledger, Defining the Financial Relationship Between Physicians and Hospitals

Abstract

The purpose of the study was to determine the financial relationship between facility and professional revenue for care delivered by two orthopaedic surgeons in a Level I trauma center for patients with multiple orthopaedic injuries. Retrospective review of medical and financial records. Level 1 trauma center. Adult patients admitted with major multiple orthopaedic trauma were included if they had a significant pelvis/acetabulum injury associated with at least 2 extremity fractures, or if they had 3 or 4 extremities requiring surgical care. All patients had limited injury to other body systems, and all had completed their care related to the injury within the study period. We identified 68 patients who met the inclusion criteria. The mean Injury Severity Score was 22.6 (range, 9 to 57) and the mean New Injury Severity Score was 35.9 (range, 27 to 57). The trauma center has an integrated economy. The surgeons are employed by the hospital, and the information systems for facility and professional services are shared through a unified business structure. Inpatient hospital charges related to the initial trauma admission and subsequent hospital-based outpatient care were abstracted from the Trendstar billing system. All medical and financial records were reviewed to exclude inpatient hospital charges related to the delivery of care by nonorthopaedic services. Orthopaedic professional fees were abstracted from the Epic billing system used for physician services. The average facility charge was US$96,000, (range, $20,400 to $334,000, SD = $62,000) and the average orthopaedic professional charge was $24,900 (range, $5,200 to $60,300, SD = $14,000). The total facility charge for the study patients was $5,854,602 and the total orthopaedic professional charge was $1,516,568. The average orthopaedic trauma charge multiplier, the dollars of facility charge created by a single dollar of orthopaedic professional charge, was 3.86, (range, 1.35 to 15.2, SD = 3.0). When differences between collection rates were considered, the net revenue multiplier, the dollars collected by the hospital for facility services generated for each dollar collected by the orthopaedic surgeon, was 7.81. The majority of the charges and the net revenue related to the care of trauma patients fall on the hospital side of the ledger. The significant multiplier for orthopaedic care delivered in the inpatient setting increases the value of the orthopaedic traumatology service above and beyond the value of the labor component as reflected by the professional fee. Understanding the value of the multiplier in different clinical situations frames the interdependent relationship between physicians and hospitals. Changes in malpractice coverage, declining professional reimbursement and reported difficulties in securing on-call coverage contribute to an emerging crisis in trauma care. The relationship between facility revenue and professional activity provides a firm basis to negotiate institutional support for orthopaedic traumatology.