Financial impact of tertiary care in an academic medical center

Abstract

Objective: To analyze the financial impact of three complex vascular surgical procedures to both an academic hospital and a department of surgery and to examine the potential impact of decreased reimbursements.

Summary background data: The cost of providing tertiary care has been implicated as one potential cause of the financial difficulties affecting academic medical centers.

Methods: Patients undergoing revascularization for chronic mesenteric ischemia, elective thoracoabdominal aortic aneurysm repair, and treatment of infected aortic grafts at the University of Florida were compared with those undergoing elective infrarenal aortic reconstruction and carotid endarterectomy. Hospital costs and profit summaries were obtained from the Clinical Resource Management Office. Departmental costs and profit summary were estimated based on the procedural relative value units (RVUs), the average clinical cost per RVU ($33.12), surgeon charges, and the collection rate for the vascular surgery division (30.2%) obtained from the Faculty Group Practice. Surgeon work effort was analyzed using the procedural work RVUs and the estimated total care time. The analyses were performed for all payors and the subset of Medicare patients, and the potential impact of a 15% reduction in hospital and physician reimbursement was analyzed.

Results: Net hospital income was positive for all but one of the tertiary care procedures, but net losses were sustained by the hospital for the mesenteric ischemia and infected aortic graft groups among the Medicare patients. In contrast, the estimated reimbursement to the department of surgery for all payors was insufficient to offset the clinical cost of providing the RVUs for all procedures, and the estimated losses were greater for the Medicare patients alone. The surgeon work effort was dramatically higher for the tertiary care procedures, whereas the reimbursement per work effort was lower. A 15% reduction in reimbursement would result in an estimated net loss to the hospital for each of the tertiary care procedures and would exacerbate the estimated losses to the department.

Conclusions: Caring for complex surgical problems is currently profitable to an academic hospital but is associated with marginal losses for a department of surgery. Economic forces resulting from further decreases in hospital and physician reimbursement may limit access to academic medical centers and surgeons for patients with complex surgical problems and may compromise the overall academic mission.