Session IX - Injury Prevention
Economic Value of Orthopaedic Trauma Services: The Bottom Line
Purpose: Hospitals struggle with the financial challenges of providing adequate trauma services. Orthopaedic trauma is a key element of trauma care with several models of implementation. There is little to no literature regarding the economics of such models. This study analyzes the economics and solvency of a establishing a dedicated hospital-based orthopaedic trauma program.
Methods: All orthopaedic patients admitted during a 4-year period to a regional Level I trauma center (nonprivate, semiacademic) were identified using diagnostic codes from an institutional trauma registry. Two time periods were analyzed: PRE (2 years) and POST (2 years) the establishment of a hospital-based orthopaedic trauma program (1 surgeon). Economic data were obtained from the institution's financial software (Eclipsys Corp, Boca Raton, FL). Expenses were obtained from the general hospital ledger (trauma service, orthopaedic trauma, and physician cost centers). Profit and loss by financial class and payer mix were also analyzed. Patients transferred out before program establishment (PRE) had estimated cost losses based on matched patients using HCUPnet database.
Results: The referral region is considered economically depressed. Aggregate payer mix for the region was Medicare 38%, Medicaid 9%, Private 47%, Self/other 6%; for the hospital, it was Medicare 27%, Medicaid 16%, Private 46%, Self/other 11%. The orthopaedic trauma program had significant positive impact on net trauma revenue in its first 2 years (year 1 51%, year 2 49%) as well as the contribution margin (year 1 46%, year 2 44%). A single orthopaedic trauma surgeon (>75 percentile RVU per year) generated 2.3 times the 2004 published hospital revenue per orthopaedic surgeon (~$3 million). After accounting for expenses, this value fell to 56% of the national average but remained significant. The loss of potential revenue when orthopaedic trauma patients are transferred (PRE) was estimated to be between $2 and $6 million per year. The combined value of orthopaedic trauma services may be conservatively estimated (recovered losses + new revenue) to be $3 to $5 million dollars per year. Also, use of software to determine indirect costs significantly overstates the overhead actually needed to run such services.
Discussion: The addition of a dedicated orthopaedic trauma program significantly contributes to net revenue (gross collections) and contribution margin (revenue minus direct costs) of the hospital, despite significant costs associated with establishing the necessary infrastructure to provide such services. While there are significant losses associated with physician professional services, these losses are overwhelmingly compensated by system revenue. Some of the possible reasons of such positive economic benefits include an increase in surgical volume, a "halo effect" of secondary reconstructions and ancillary service use, and efficient and timely care of poor payers. Most importantly, comprehensive and continuity of care is provided to the community.