Hospital profitability per hour of operating room time can vary among surgeons

Abstract

The operating margins (i.e., profits) of hospitals are decreasing. An important aspect of a hospital's finances is the profitability of individual surgical cases, which is measured by contribution margin. We sought to determine the extent to which contribution margin per hour of operating room (OR) time can vary among surgeons. We retrospectively analyzed 2848 elective cases performed by 94 surgeons at the Stanford University School of Medicine. For each case, we subtracted variable costs from the total payment to the hospital to compute contribution margin. We found moderate variability in contribution margin per hour of OR time among surgeons, relative to the variability in contribution margins per OR hour among each surgeon's cases (Cohen's f equaled 0.29, 95% lower confidence interval bound 0.27). Contribution margin per OR hour was negative for 26% of the cases. These results have implications for hospitals for which OR utilization is extensive, and for which elective cases are only scheduled if they can be completed during regularly scheduled hours. To increase or achieve profitability, managers need to increase the hours of lucrative cases, rather than encourage surgeons to do more and more cases. Whether the variability in contribution margin among surgeons should be used to more optimally (profitably) allocate OR time depends on the scheduling objectives of the surgical suite.