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Impact of robotic operative efficiency on profitability
Letters to the Editors
ajog.org
Impact of robotic operative efficiency on profitability TO THE EDITORS: We have read the article of Drs Mueller and Matthews on the “impact of robotic operative efficiency on profitability” with interest and have several questions.1 First, it appears that very little information is provided about the assumptions that were made for the calculation of costs. Specifically, how did the authors approach the allocation of “indirect” and “fixed” costs? This report is essentially the publication of a decision analysis and yet any other decision analysis that we have seen published in this journal includes an exhaustive description of the underlying assumptions used in the decision analytic model. Measuring the actual organizational resource use associated with surgical and inpatient care is notoriously complex. When comparing the cost of different interventions, this is of less importance because the assumptions are shared across different interventions. However, when trying to judge the absolute “profitability” of a specific service the assumptions used for the allocation of indirect costs become much more important to the ultimate conclusion. Our second question stems from the analysis of the data that was presented, which seems to show the per-case cost of robotic surgeries going up with time and increased volume. The only reason the program appears to be more “profitable” as time goes on is that reimbursements increased more than costs. Because there is no information on case-mix/acuity, it leaves the reader with the impression that the only reason that the program is doing better financially is because they are capturing more revenue per case. Yet the authors seem to imply that improved efficiency and higher volume are the pathways to “profitability” for robotic programs. Finally, in the discussion the authors state “a similar reduction in operative cost was demonstrated for gynecologic procedures at Brigham and Women’s Hospital (Boston, MA), where robotic procedural case time decreased significantly over the study period.” This is not correct. In that study (authored by one of us [J.E.]), we found no significant decrease in procedural time for robotic cases, whereas we found a significant reduction in operating room time in the laparoscopic, nonrobotic, group.2 We also found that the robotic hysterectomies were associated with the highest operating room cost in both 2006 and in 2009. In addition, we would like to point out that we retracted the findings for total hospital cost and societal cost in a separate letter to the editor.3 One final point: it appears that references 18 and 19 are not citing the correct paper and this needs to be corrected. We look forward to the views of the authors and/or editors on these matters. Abraham Morse, MD, MBA Neeraj Kohli, MD, MBA Jon Ivar Einarsson, MD, MPH Department of Obstetrics
Gynecology and Reproductive Biology Harvard Medical School [email protected] The authors report no conflict of interest.
REFERENCES 1. Geller EJ, Matthews CA. Impact of robotic operative efficiency on profitability. Am J Obstet Gynecol 2013;209:20.e1-5. 2. Jonsdottir GM, Jorgensen S, Cohen SL, et al. Increasing minimally invasive hysterectomy: effect on cost and complications. Obstet Gynecol 2011;117:1142-9. 3. Einarsson JI. Increasing minimally invasive hysterectomy: effect on cost and complications. Obstet Gynecol 2012;119:185. ª 2014 Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.ajog. 2014.08.011
REPLY We thank Dr Morse and his colleagues for their comments regarding our publication entitled “Impact of robotic operative efficiency on profitability.” In clarification, the manuscript reports an analysis of the actual financial data for fiscal years 2010 and 2011 at our institution: “All associated costs, charges, assigned overhead, and total reimbursements were collected.Profitability was defined as a positive operating income. Operating income was defined as total revenue minus total operating costs (fixed and variable). Direct variable contribution margin was defined as payments minus direct variable costs (eg. instrumentation, operating room supplies, and labor).” As can be seen, the analyses were based on hard data rather than constructed as a decision analysis. The primary aim of this manuscript was to determine whether a large, coordinated, multidisciplinary academic robotics program was profitable. Secondary aims included understanding what factors affected the profitability. Based on the objectively defined endpoints described above, we found that the program as a whole was profitable for both fiscal years 2010 and 2011. When we reviewed each surgical service, we found 2 programs, which were only profitable in fiscal year 2011. Based on both bivariate analysis and Pearson correlation, it was demonstrated that operating income was directly associated with mean operating time. This association was neither implied nor assumed, but was directly demonstrated through several analyses. Our findings are logical, given that maximizing resource use (operating room staff, operating room use, surgeon, and anesthesiologist time) by performing more cases in a given time period will increase revenue over cost. They are indeed correct that our total costs and charges increased from fiscal year 2010 to fiscal year 2011, yet the assumption that “per-case cost went up” is not. As cost and reimbursement vary widely according to the diagnosis related group (Table 3), simply dividing the total
NOVEMBER 2014 American Journal of Obstetrics & Gynecology
569
ajog.org
Impact of robotic operative efficiency on profitability TO THE EDITORS: We have read the article of Drs Mueller and Matthews on the “impact of robotic operative efficiency on profitability” with interest and have several questions.1 First, it appears that very little information is provided about the assumptions that were made for the calculation of costs. Specifically, how did the authors approach the allocation of “indirect” and “fixed” costs? This report is essentially the publication of a decision analysis and yet any other decision analysis that we have seen published in this journal includes an exhaustive description of the underlying assumptions used in the decision analytic model. Measuring the actual organizational resource use associated with surgical and inpatient care is notoriously complex. When comparing the cost of different interventions, this is of less importance because the assumptions are shared across different interventions. However, when trying to judge the absolute “profitability” of a specific service the assumptions used for the allocation of indirect costs become much more important to the ultimate conclusion. Our second question stems from the analysis of the data that was presented, which seems to show the per-case cost of robotic surgeries going up with time and increased volume. The only reason the program appears to be more “profitable” as time goes on is that reimbursements increased more than costs. Because there is no information on case-mix/acuity, it leaves the reader with the impression that the only reason that the program is doing better financially is because they are capturing more revenue per case. Yet the authors seem to imply that improved efficiency and higher volume are the pathways to “profitability” for robotic programs. Finally, in the discussion the authors state “a similar reduction in operative cost was demonstrated for gynecologic procedures at Brigham and Women’s Hospital (Boston, MA), where robotic procedural case time decreased significantly over the study period.” This is not correct. In that study (authored by one of us [J.E.]), we found no significant decrease in procedural time for robotic cases, whereas we found a significant reduction in operating room time in the laparoscopic, nonrobotic, group.2 We also found that the robotic hysterectomies were associated with the highest operating room cost in both 2006 and in 2009. In addition, we would like to point out that we retracted the findings for total hospital cost and societal cost in a separate letter to the editor.3 One final point: it appears that references 18 and 19 are not citing the correct paper and this needs to be corrected. We look forward to the views of the authors and/or editors on these matters. Abraham Morse, MD, MBA Neeraj Kohli, MD, MBA Jon Ivar Einarsson, MD, MPH Department of Obstetrics
Gynecology and Reproductive Biology Harvard Medical School [email protected] The authors report no conflict of interest.
REFERENCES 1. Geller EJ, Matthews CA. Impact of robotic operative efficiency on profitability. Am J Obstet Gynecol 2013;209:20.e1-5. 2. Jonsdottir GM, Jorgensen S, Cohen SL, et al. Increasing minimally invasive hysterectomy: effect on cost and complications. Obstet Gynecol 2011;117:1142-9. 3. Einarsson JI. Increasing minimally invasive hysterectomy: effect on cost and complications. Obstet Gynecol 2012;119:185. ª 2014 Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.ajog. 2014.08.011
REPLY We thank Dr Morse and his colleagues for their comments regarding our publication entitled “Impact of robotic operative efficiency on profitability.” In clarification, the manuscript reports an analysis of the actual financial data for fiscal years 2010 and 2011 at our institution: “All associated costs, charges, assigned overhead, and total reimbursements were collected.Profitability was defined as a positive operating income. Operating income was defined as total revenue minus total operating costs (fixed and variable). Direct variable contribution margin was defined as payments minus direct variable costs (eg. instrumentation, operating room supplies, and labor).” As can be seen, the analyses were based on hard data rather than constructed as a decision analysis. The primary aim of this manuscript was to determine whether a large, coordinated, multidisciplinary academic robotics program was profitable. Secondary aims included understanding what factors affected the profitability. Based on the objectively defined endpoints described above, we found that the program as a whole was profitable for both fiscal years 2010 and 2011. When we reviewed each surgical service, we found 2 programs, which were only profitable in fiscal year 2011. Based on both bivariate analysis and Pearson correlation, it was demonstrated that operating income was directly associated with mean operating time. This association was neither implied nor assumed, but was directly demonstrated through several analyses. Our findings are logical, given that maximizing resource use (operating room staff, operating room use, surgeon, and anesthesiologist time) by performing more cases in a given time period will increase revenue over cost. They are indeed correct that our total costs and charges increased from fiscal year 2010 to fiscal year 2011, yet the assumption that “per-case cost went up” is not. As cost and reimbursement vary widely according to the diagnosis related group (Table 3), simply dividing the total
NOVEMBER 2014 American Journal of Obstetrics & Gynecology
569