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Life Sciences, and MEDLINE
Rodriguez et al 545
Surgery Volume 130, Number 4 whole lot of money by reducing length of stay. Where we really need to work is reducing our workups in the first 24 to 48 hours if we are going to increase our profit margins. Is your trauma service starting to look at how you are evaluating patients initially? Dr Kenneth J. Printen (Evanston, Ill). Why was the burn population excluded from this consideration of trauma? Was there a real difference in how things are funded or just an arbitrary decision? Dr Carol Scott-Conner (Iowa City, Iowa). I would like to make a plea to the network of level I trauma centers to start doing coordinated collaborative trials looking at things like cost-effectiveness. I do believe that we could address some of these issues through streamlining our workup, as has been mentioned. Many of us are doing a lot of negative computed axial tomography scans and so on. Through welldesigned collaborative prospective trials, we could probably determine the best and most cost-effective way to do this. Dr Michael Abecassis (Chicago, Ill). What Dr Lewis said is right. We may be getting away from managed care, but we are certainly not getting away from managed competition. What you have described in Minnesota sounds like a perfect example of a competitive market with all the rules that apply to a competitive market. So rather than to look at your costs, it may be more helpful to look at how your costs compare to the costs of others in your market. I realize those are difficult numbers to get, but that comparison would hold a lot more water than comparing your costs to your profit margin. You are talking about profit margins, but more realistically you should probably be looking at contribution margins. Analyzing the contribution margin of the trauma program with respect to the contribution margin of the institution as a whole may help you better assess the full impact of the program on the institution. Dr Rodriguez. Concerning Dr Lewis’ comments, we do present the cost data. He is right, and we are very lucky to have that available within our institution. I
would like to address a concern regarding Dr Lewis’ discussion point. If we continue to reduce our costs and payments drop farther below cost reduction, that means that the contribution margin at both the institution and the trauma center would fall. I do agree with you that we need to look within ourselves in the context of reducing costs. But at the same time, we have to be certain that payments are maintained so that in the face of cost reduction, profit margins will either be maintained or increased. This is extremely important for us and other urban academic health care centers, because we cross-subsidize other programs for social needs. HMOs and managed care organizations at the moment do not believe that this is part of their mission. Perhaps in the years to come that will be addressed either through governmental controls or through an inner look at their conscience. Concerning HMOs, I think it is a fallacy that nonacademic integrated delivery systems are efficient, cost-effective, and don’t increase costs. In Minneapolis right now we have a double-digit increase in managed care. To date, managed care organizations within the Twin Cities are having financial difficulties. I believe strongly that they are no more efficient than we are at the present. Dr Luchette, we have also come to the conclusion that reducing length of stay is not normally an effective way of reducing costs. A more important concern would be the utilization of resources for trauma patients in the first 48 hours. We find this to be a poignant concern because in the next 5 years it is clear that the payment distribution for trauma care is going to be reduced by at least 20%. We will need to decrease our costs by at least 30% to maintain a profit margin of 10%. Dr Scott-Connor, I do agree with you that other trauma centers need to look at these issues and that a national effort should perhaps be undertaken to evaluate multiple trauma centers throughout the country and assess the issues of reimbursement and trauma costs.
Surgery is abstracted and/or indexed in Index Medicus, Science Citation Index, Current Contents/ Clinical Medicine, Current Contents/Life Sciences, and MEDLINE. This Journal has been registered with Copyright Clearance Center, Inc, 222 Rosewood Dr, Danvers, MA 01923. Consent is given for the copying of articles for personal or internal use of specific clients. This consent is given on the condition that the copier pay directly to the Center the per-copy fee stated on the first page of each article for copying beyond that permitted by US Copyright Law. This consent does not extend to other kinds of copying, such as for general distribution, resale, advertising and promotional purposes, or for creating new collective works. All inquiries regarding copyrighted material from this publication other than those that can be handled through Copyright Clearance Center should be directed to Journals Permission Department, Mosby, Inc, 6277 Sea Harbor Dr, FL 32887; (407) 345-4058.
Surgery Volume 130, Number 4 whole lot of money by reducing length of stay. Where we really need to work is reducing our workups in the first 24 to 48 hours if we are going to increase our profit margins. Is your trauma service starting to look at how you are evaluating patients initially? Dr Kenneth J. Printen (Evanston, Ill). Why was the burn population excluded from this consideration of trauma? Was there a real difference in how things are funded or just an arbitrary decision? Dr Carol Scott-Conner (Iowa City, Iowa). I would like to make a plea to the network of level I trauma centers to start doing coordinated collaborative trials looking at things like cost-effectiveness. I do believe that we could address some of these issues through streamlining our workup, as has been mentioned. Many of us are doing a lot of negative computed axial tomography scans and so on. Through welldesigned collaborative prospective trials, we could probably determine the best and most cost-effective way to do this. Dr Michael Abecassis (Chicago, Ill). What Dr Lewis said is right. We may be getting away from managed care, but we are certainly not getting away from managed competition. What you have described in Minnesota sounds like a perfect example of a competitive market with all the rules that apply to a competitive market. So rather than to look at your costs, it may be more helpful to look at how your costs compare to the costs of others in your market. I realize those are difficult numbers to get, but that comparison would hold a lot more water than comparing your costs to your profit margin. You are talking about profit margins, but more realistically you should probably be looking at contribution margins. Analyzing the contribution margin of the trauma program with respect to the contribution margin of the institution as a whole may help you better assess the full impact of the program on the institution. Dr Rodriguez. Concerning Dr Lewis’ comments, we do present the cost data. He is right, and we are very lucky to have that available within our institution. I
would like to address a concern regarding Dr Lewis’ discussion point. If we continue to reduce our costs and payments drop farther below cost reduction, that means that the contribution margin at both the institution and the trauma center would fall. I do agree with you that we need to look within ourselves in the context of reducing costs. But at the same time, we have to be certain that payments are maintained so that in the face of cost reduction, profit margins will either be maintained or increased. This is extremely important for us and other urban academic health care centers, because we cross-subsidize other programs for social needs. HMOs and managed care organizations at the moment do not believe that this is part of their mission. Perhaps in the years to come that will be addressed either through governmental controls or through an inner look at their conscience. Concerning HMOs, I think it is a fallacy that nonacademic integrated delivery systems are efficient, cost-effective, and don’t increase costs. In Minneapolis right now we have a double-digit increase in managed care. To date, managed care organizations within the Twin Cities are having financial difficulties. I believe strongly that they are no more efficient than we are at the present. Dr Luchette, we have also come to the conclusion that reducing length of stay is not normally an effective way of reducing costs. A more important concern would be the utilization of resources for trauma patients in the first 48 hours. We find this to be a poignant concern because in the next 5 years it is clear that the payment distribution for trauma care is going to be reduced by at least 20%. We will need to decrease our costs by at least 30% to maintain a profit margin of 10%. Dr Scott-Connor, I do agree with you that other trauma centers need to look at these issues and that a national effort should perhaps be undertaken to evaluate multiple trauma centers throughout the country and assess the issues of reimbursement and trauma costs.
Surgery is abstracted and/or indexed in Index Medicus, Science Citation Index, Current Contents/ Clinical Medicine, Current Contents/Life Sciences, and MEDLINE. This Journal has been registered with Copyright Clearance Center, Inc, 222 Rosewood Dr, Danvers, MA 01923. Consent is given for the copying of articles for personal or internal use of specific clients. This consent is given on the condition that the copier pay directly to the Center the per-copy fee stated on the first page of each article for copying beyond that permitted by US Copyright Law. This consent does not extend to other kinds of copying, such as for general distribution, resale, advertising and promotional purposes, or for creating new collective works. All inquiries regarding copyrighted material from this publication other than those that can be handled through Copyright Clearance Center should be directed to Journals Permission Department, Mosby, Inc, 6277 Sea Harbor Dr, FL 32887; (407) 345-4058.