The impact on revenue of increasing patient volume at surgical suites with relatively high operating room utilization

Abstract

We previously studied hospitals in the United States of America that are losing money despite limiting the hours that operating room (OR) staff are available to care for patients undergoing elective surgery. These hospitals routinely keep utilization relatively high to maximize revenue. We tested, using discrete-event computer simulation, whether increasing patient volume while being reimbursed less for each additional patient can reliably achieve an increase in revenue when initial adjusted OR utilization is 90%. We found that increasing the volume of referred patients by the amount expected to fill the surgical suite (100%/90%) would increase utilization by <1% for a hospital surgical suite (with longer duration cases) and 4% for an ambulatory surgery suite (with short cases). The increase in patient volume would result in longer patient waiting times for surgery and more patients leaving the surgical queue. With a 15% reduction in payment for the new patients, the increase in volume may not increase revenue and can even decrease the contribution margin for the hospital surgical suite. The implication is that for hospitals with a relatively high OR utilization, signing discounted contracts to increase patient volume by the amount expected to "fill" the OR can have the net effect of decreasing the contribution margin (i.e., profitability).

Implications: Hospitals may try to attract new surgical volume by offering discounted rates. For hospitals with a relatively high operating room utilization (e.g., 90%), computer simulations predict that increasing patient volume by the amount expected to "fill" the operating room can have the net effect of decreasing contribution margin (i.e., profitability).