Economies of Scale, Physician Volume for Orthopedic Surgical Patients, and the DRG Prospective Payment System

Abstract

American hospitals face increasing constraints due to a variety of factors. Federal and state diagnostic-related group (DRG) prospective hospital pricing has caused tremendous fiscal pressure on hospitals; many face substantial financial deficits. We analyzed the volume of orthopedic surgical procedures performed by an individual orthopedic surgeon for all patients (N = 2,134) treated for a 3-year period at a large academic medical center; these surgeons were arbitrarily divided into low volume or high volume. Patients of low volume surgeons had a longer hospital length of stay and hospital cost (after correction for DRG case mix and severity of illness), greater financial risk under DRGs, and a poorer outcome, compared with patients of higher volume orthopedic surgeons. Pearson correlation showed an inverse relationship between cost per patient and physician volume for nonemergency patients -0.201 (P less than .0001), and emergency patients, -0.321 (P less than .0001). Although the reasons for these findings appeared multifactoral, they raise important issues related to orthopedic surgical hospital costs, access, and quality of care. In addition, they suggest that hospital cost for these patients (and perhaps outcome) may be related to orthopedic surgical volume, and that DRG hospital payment (on the margin) may affect future orthopedic surgical practice opportunities.