Hospitals have historically relied on surgeries contributing to their top service lines and providing a significant source of revenue generation for hospitals and surgeons. This has, in part, led to the overutilization of surgeries. In the area of spinal surgeries, as noted in the Modern Healthcare article from March 24, 2014, the mounting research evidence shows that too many Americans are undergoing unnecessary spinal procedures and experiencing mixed outcomes. According to the Agency for Healthcare Research and Quality, there were more than 465,000 spinal-fusion operations in the U.S. in 2011, compared with 252,400 in 2001. The estimated cost of spinal-fusion procedures was more than $12.8 billion in 2011, according to AHRQ. Hospital costs alone for a spine procedure average $27,568 and total costs can hit six figures for major spinal-fusion procedures, experts say.
Isolating Spinal Surgeries
Spinal surgeries can occur in both inpatient and outpatient settings. Through the use of the Major Diagnostic Categories (MDC), the MDC related to musculoskeletal diseases has the highest cost (as measured by the total allowed amount) we will focus on the inpatient facility component for these surgeries. From here, drilling to the individual DRGs within this MDC will present the DRGs on which targeted analysis can be conducted.
There are several types of spinal fusion surgery DRGs but DRG460 has the highest total cost and the highest volume.
There are several options to continue the analysis. Using Milliman Benchmarks validates the opportunity based upon the total cost as well as the cost per admit. While the total allowed amount is higher than the benchmarks, the allowed per admit is significantly higher.
Understanding the elements driving this utilization and associated costs can include a demographic analysis to evaluate the variances within the population. Below, we show the breakout between gender by basic age bands, showing a higher surgical incidence among females across almost all age groups.
Another level of analysis can take a more clinical focus and isolate the types of diagnoses driving these surgeries. The AHRQ Clinical Classification System (CCS) rolls up the detail of the ICD9 diagnoses for efficient drilling for analysis, allowing you to quickly get to detailed diagnosis information.
Additional analysis could include:
- Provider level drills evaluating for specific patterns. This would include a look at what facilities these surgeries are occurring as well the individual surgeons, to compare the cost and utilization at each of these levels.
- Assessment of pre-operative activities – Evaluating outpatient modalities focused on non-surgical interventions to determine what activities occurred prior to the decision to perform surgery.
With the growing consensus about overutilization of surgery, more organizations are developing centers of care that promote a more coordinated approach to care. These centers offer multiple alternatives to surgery using a variety of treatment modalities and resources in a coordinated manner to reduce or avoid unnecessary surgeries while maintaining good patient outcomes.
Being able to analyze and understand the utilization of spinal surgeries is an important component in developing strategies to provide alternatives to surgery to help reduce utilization, curb the costs and better align with changing financial incentives.