[Skip to Content]
Access to paid content on this site is currently suspended due to excessive activity being detected from your IP address 18.207.240.35. Please contact the publisher to request reinstatement.
[Skip to Content Landing]
1.
Bai  G, Anderson  GF.  Extreme markup: the fifty US hospitals with the highest charge-to-cost ratios.  Health Aff (Millwood). 2015;34(6):922-928.PubMedGoogle ScholarCrossref
2.
Nathan  H, Dimick  JB.  Medicare’s shift to mandatory alternative payment models: why surgeons should care.  JAMA Surg. 2017;152(2):125-126.PubMedGoogle ScholarCrossref
3.
Gitelis  M, Vigneswaran  Y, Ujiki  MB,  et al.  Educating surgeons on intraoperative disposable supply costs during laparoscopic cholecystectomy: a regional health system’s experience.  Am J Surg. 2015;209(3):488-492.PubMedGoogle ScholarCrossref
4.
Guzman  MJ, Gitelis  ME, Linn  JG,  et al.  A Model of cost reduction and standardization: improved cost savings while maintaining the quality of care.  Dis Colon Rectum. 2015;58(11):1104-1107.PubMedGoogle ScholarCrossref
5.
Krpata  DM, Haskins  IN, Rosenblatt  S, Grundfest  S, Prabhu  A, Rosen  MJ.  Development of a disease-based hernia program and the impact on cost for a hospital system.  Ann Surg. 2018;267(2):370-374.PubMedGoogle ScholarCrossref
6.
Zygourakis  CC, Valencia  V, Moriates  C,  et al.  Association between surgeon scorecard use and operating room costs.  JAMA Surg. 2017;152(3):284-291.PubMedGoogle ScholarCrossref
7.
Brodsky  JB.  Cost savings in the operating room.  Anesthesiology. 1998;88(3):834.PubMedGoogle ScholarCrossref
8.
Tsai  M.  The true cost of operating room time.  Arch Surg. 2011;146(7):886.PubMedGoogle ScholarCrossref
9.
Brown  JK, Campbell  BT, Drongowski  RA,  et al.  A prospective, randomized comparison of skin adhesive and subcuticular suture for closure of pediatric hernia incisions: cost and cosmetic considerations.  J Pediatr Surg. 2009;44(7):1418-1422.PubMedGoogle ScholarCrossref
10.
Tillmanns  TD, Mabe  A, Ulm  MA, Lee  D, Lowe  P, Kumar  S.  Vaginal cuff closure in robotic hysterectomy: a randomized controlled trial comparing barbed versus standard suture.  J Gynecol Surg. 2016;32(4):215-219. doi:10.1089/gyn.2015.0139Google ScholarCrossref
11.
Ting  NT, Moric  MM, Della Valle  CJ, Levine  BR.  Use of knotless suture for closure of total hip and knee arthroplasties: a prospective, randomized clinical trial.  J Arthroplasty. 2012;27(10):1783-1788.PubMedGoogle ScholarCrossref
12.
Eggers  MD, Fang  L, Lionberger  DR.  A comparison of wound closure techniques for total knee arthroplasty.  J Arthroplasty. 2011;26(8):1251-8.e1, 4.PubMedGoogle ScholarCrossref
13.
Lukish  J, Powell  D, Morrow  S, Cruess  D, Guzzetta  P.  Laparoscopic appendectomy in children: use of the endoloop vs the endostapler.  Arch Surg. 2007;142(1):58-61.PubMedGoogle ScholarCrossref
14.
Macario  A.  What does one minute of operating room time cost?  J Clin Anesth. 2010;22(4):233-236.PubMedGoogle ScholarCrossref
15.
Muñoz  E, Muñoz  W  III, Wise  L.  National and surgical health care expenditures, 2005-2025.  Ann Surg. 2010;251(2):195-200.PubMedGoogle ScholarCrossref
16.
Stey  AM, Brook  RH, Needleman  J,  et al.  Hospital costs by cost center of inpatient hospitalization for Medicare patients undergoing major abdominal surgery.  J Am Coll Surg. 2015;220(2):207-17.e11.PubMedGoogle ScholarCrossref
17.
Office of Statewide Health Planning and Development. Accounting and reporting manual for California hospitals, second edition. https://www.oshpd.ca.gov/documents/HID/HospitalFormsInstructions/ch2000.pdf. Accessed June 20, 2017.
18.
Baker  JJ, Baker  RW.  Health Care Finance: Basic Tools for Nonfinancial Managers. 4th ed. Burlington, Massachusetts: Jones & Bartlett Learning; 2014.
19.
Sanders  GD, Neumann  PJ, Basu  A,  et al.  Recommendations for conduct, methodological practices, and reporting of cost-effectiveness analyses: second panel on cost-effectiveness in health and medicine.  JAMA. 2016;316(10):1093-1103.PubMedGoogle ScholarCrossref
20.
Joynt  KE, Orav  EJ, Jha  AK.  Association between hospital conversions to for-profit status and clinical and economic outcomes.  JAMA. 2014;312(16):1644-1652.PubMedGoogle ScholarCrossref
21.
Holloran-Schwartz  MB, Gavard  JA, Martin  JC, Blaskiewicz  RJ, Yeung  PP  Jr.  Single-use energy sources and operating room time for laparoscopic hysterectomy: a randomized controlled trial.  J Minim Invasive Gynecol. 2016;23(1):72-77.PubMedGoogle ScholarCrossref
22.
Sah  AP.  Is there an advantage to knotless barbed suture in TKA wound closure? a randomized trial in simultaneous bilateral TKAs.  Clin Orthop Relat Res. 2015;473(6):2019-2027.PubMedGoogle ScholarCrossref
23.
Sebesta  MJ, Bishoff  JT.  Octylcyanoacrylate skin closure in laparoscopy.  J Endourol. 2003;17(10):899-903.PubMedGoogle ScholarCrossref
24.
Najjar  PA, Strickland  M, Kaplan  RS.  Time-driven activity-based costing for surgical episodes.  JAMA Surg. 2017;152(1):96-97.PubMedGoogle ScholarCrossref
25.
Kaplan  RS, Porter  ME.  How to solve the cost crisis in health care.  Harv Bus Rev. 2011;89(9):46-52, 54, 56-61 passim.PubMedGoogle Scholar
26.
DiGioia  AM  III, Greenhouse  PK, Giarrusso  ML, Kress  JM.  Determining the true cost to deliver total hip and knee arthroplasty over the full cycle of care: preparing for bundling and reference-based pricing.  J Arthroplasty. 2016;31(1):1-6.PubMedGoogle ScholarCrossref
27.
McLaughlin  N, Burke  MA, Setlur  NP,  et al.  Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.  Neurosurg Focus. 2014;37(5):E3.PubMedGoogle ScholarCrossref
28.
Yu  YR, Abbas  PI, Smith  CM,  et al.  Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomy.  J Pediatr Surg. 2016;51(12):1962-1966.PubMedGoogle ScholarCrossref
29.
Chatterjee  A, Payette  MJ, Demas  CP, Finlayson  SR.  Opportunity cost: a systematic application to surgery.  Surgery. 2009;146(1):18-22.PubMedGoogle ScholarCrossref
Original Investigation
April 18, 2018

Understanding Costs of Care in the Operating Room

Author Affiliations
  • 1Department of Surgery, David Geffen School of Medicine at University of California, Los Angeles
JAMA Surg. 2018;153(4):e176233. doi:10.1001/jamasurg.2017.6233
Key Points

Questions  What is the cost of 1 minute of operating room time, and what contributes to this cost?

Findings  In this cross-sectional analysis, the mean cost of operating room time in fiscal year 2014 for California’s acute care hospitals was $36 to $37 per minute; $20 to $21 of this amount is direct cost, with $13 to $14 attributable to wages and benefits and $2.50 to $3.50 attributable to surgical supplies.

Meaning  These numbers are the first standardized estimates of operating room cost; understanding the composition of costs will allow those interested in value improvement to identify high-yield targets.

Abstract

Importance  Increasing value requires improving quality or decreasing costs. In surgery, estimates for the cost of 1 minute of operating room (OR) time vary widely. No benchmark exists for the cost of OR time, nor has there been a comprehensive assessment of what contributes to OR cost.

Objectives  To calculate the cost of 1 minute of OR time, assess cost by setting and facility characteristics, and ascertain the proportion of costs that are direct and indirect.

Design, Setting, and Participants  This cross-sectional and longitudinal analysis examined annual financial disclosure documents from all comparable short-term general and specialty care hospitals in California from fiscal year (FY) 2005 to FY2014 (N = 3044; FY2014, n = 302). The analysis focused on 2 revenue centers: (1) surgery and recovery and (2) ambulatory surgery.

Main Outcomes and Measures  Mean cost of 1 minute of OR time, stratified by setting (inpatient vs ambulatory), teaching status, and hospital ownership. The proportion of cost attributable to indirect and direct expenses was identified; direct expenses were further divided into salary, benefits, supplies, and other direct expenses.

Results  In FY2014, a total of 175 of 302 facilities (57.9%) were not for profit, 78 (25.8%) were for profit, and 49 (16.2%) were government owned. Thirty facilities (9.9%) were teaching hospitals. The mean (SD) cost for 1 minute of OR time across California hospitals was $37.45 ($16.04) in the inpatient setting and $36.14 ($19.53) in the ambulatory setting (P = .65). There were no differences in mean expenditures when stratifying by ownership or teaching status except that teaching hospitals had lower mean (SD) expenditures than nonteaching hospitals in the inpatient setting ($29.88 [$9.06] vs $38.29 [$16.43]; P = .006). Direct expenses accounted for 54.6% of total expenses ($20.40 of $37.37) in the inpatient setting and 59.1% of total expenses ($20.90 of $35.39) in the ambulatory setting. Wages and benefits accounted for approximately two-thirds of direct expenses (inpatient, $14.00 of $20.40; ambulatory, $14.35 of $20.90), with nonbillable supplies accounting for less than 10% of total expenses (inpatient, $2.55 of $37.37; ambulatory, $3.33 of $35.39). From FY2005 to FY2014, expenses in the OR have increased faster than the consumer price index and medical consumer price index. Teaching hospitals had slower growth in costs than nonteaching hospitals. Over time, the proportion of expenses dedicated to indirect costs has increased, while the proportion attributable to salary and supplies has decreased.

Conclusions and Relevance  The mean cost of OR time is $36 to $37 per minute, using financial data from California’s short-term general and specialty hospitals in FY2014. These statewide data provide a generalizable benchmark for the value of OR time. Furthermore, understanding the composition of costs will allow those interested in value improvement to identify high-yield targets.

×