28 Feb Labor Costs Account For Largest Percentage of Operating Room Expenses
MedicalResearch.com Interview with:
Dr. Chris Childers, M.D.
Division of General Surgery
David Geffen School of Medicine at UCLA
Los Angeles, CA 90095
MedicalResearch.com: What is the background for this study? What are the main findings?
Response: Over 20 million Americans undergo a surgical procedure each year with a price tag over $1 trillion. The operating room (OR) is a particularly resource dense environment, yet little is known about the actual costs of running an OR. Most previous efforts focusing on OR costs have come from single-site studies with little detail about the drivers of OR costs.
Using financial statements from all California hospitals we estimated that the average cost to the hospital for one minute of OR time was between $36 and $37. Perhaps more notable was the composition of these costs. Almost two-thirds ($20-21) was attributable to “direct costs” – those generated by the OR itself – including $14 for the wages and benefits of staff, $2.50-3.50 for surgical supplies, and $3 for “other” costs such as equipment repair and depreciation. Interestingly, the remainder ($14-16) was dedicated to “indirect costs” such as the costs associated with hospital security and parking. While these indirect costs are necessary for a hospital to run, they are not under the purview of the operating room.
Finally, we also learned that OR costs have increased quickly over the past 10 years – faster than other sectors of healthcare as well as the rest of the economy.
MedicalResearch.com: What should readers take away from your report?
Response: There are a two key takeways from this study:
First, while the average cost of one minute of OR time was found to be $36-37, a significant proportion of this cost is not easily modifiable, at least not in the short term. The areas that can and should be targeted are those costs related to staffing (wages/benefits) as well as surgical supplies.
Second, we hope this paper can help guide future cost savings efforts. Previous studies in this area have often used the “cost of OR time” in their cost savings estimates. For example, if a study saved 3 minutes of OR time, they would claim a $108 ($36 x 3) cost savings. However, because many of these costs would not change through time savings alone – eg, indirect costs, staff benefits – the actual cost savings to the hospital may be much less.
MedicalResearch.com: What recommendations do you have for future research as a result of this work?
Response: Given the rapid increase in healthcare spending, findings ways to curb unnecessary costs is critical. Indeed, our study found that OR costs are increasing not only faster that the rest of the economy, but also faster than healthcare in general. We hope future research will use the numbers presented in this paper to benchmark their efforts and to inform which areas of healthcare make high-yield targets.
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