How hospitals recoup the cost of buying robotic surgery systems

The blogger known only as the Skeptical Scalpel (self-described as a surgeon for 40 years and a surgical department chairman and residency program director for over 23 of those years) continues his thread of posts raising questions about the proliferation of robotic surgery.

The latest is entitled “Study: Robotic surgery financials explained.” It’s his take on a paper presented at the annual meeting of the American Association of Gynecologic Laparoscopists. Excerpts:

The headline, “Robotic Hysterectomy Cuts Blood Loss in Obese,” is certainly catchy. Let’s look deeper.

…

The lead author said, “The robotic hysterectomy does … offer lower rates of conversion to laparotomy but does cause higher facility and total charges, as well as higher reimbursement rates.” The mean total hospital charge for robotic hysterectomy was $44,700 versus $25,557, a statistically significant difference. The average charge for the robotic instruments was $8,322 compared to $3,762 for standard laparoscopy equipment, also a significant difference. In response to a question about why there was such a disparity, the lead author said: “The charges are likely to recoup the cost of the robot purchase. We have multiple robots … four at our main institution and several others at other sites.”

The reimbursement actually received for robotic hysterectomy was $19,000 and for standard laparoscopic, a mere $$8,000.

I congratulate the authors for their candor [though no doubt inadvertent] in sharing the financial data and the reasons why robotic surgery is more costly. I am gobsmacked* at the differential in charges and reimbursement for the two types of hysterectomy and that the secret would be so openly shared.

I guess someone has to help the hospital “recoup the cost of the robot purchase.” But I wonder why third party payers are shelling out almost two-and-a half times more money for a procedure that has not been proven more effective than standard laparoscopic surgery?

And you wonder why health care costs are skyrocketing?

Comments

Walter Lipman posted on February 13, 2012 at 9:25 am

Using this “pay as you use” logic, I wouldn’t be the least bit surprised to see one set of charges for your bed being located in the hospital’s parking lot versus another and higher set of charges for your bed being located in a room inside the hospital.

Michelle Luthringshausen, MD posted on February 21, 2012 at 8:54 am

As a surgeon, I am fascinated by this shallow analysis of cost and complete disregard for what is best for the patient. An open hysterectomy has a complication rate of 11%, highest in obese patients. A robotic hysterectomy done by an experienced surgeon in an obese patient has a complication rate of 3%. Complications are expensive for hospitals, health systems and especially patients. According to the American College of Surgeons NSQIP data, one complication’s DIRECT costs are around $12,000.
My second comment is that “charges” are only relevant in the uninsured patient, which will rarely be recouped anyway. The “cost” is what the insurance company and patients actually pay or reimburse, which is a contracted price based on the procedure done, NOT the way it was done, in an insured patient. In most cases, the hospital and surgeon get paid the same fee whether the robot was used or not.

Skeptical Scalpel posted on February 21, 2012 at 6:51 pm

Dr. Luthringshausen is listed as the Medical Director of the Gynecologic Robotic Surgery Institute at Northwest Community Hospital in Arlington, IL. Obviously she is an advocate of robotic surgery.

I would point out that I was merely reporting what the author/presenter (a fellow in advanced minimally invasive gynecologic surgery) of the study of robotic hysterectomy said in the article in Surgical News. I did not do any analysis, shallow or otherwise.

Dr. Luthringshausen, please provide us with a link to the study that shows a complication rate of 3% for robotic hysterectomy. And why compare it to open hysterectomy? Wouldn’t a comparison to standard laparoscopic hysterectomy be more appropriate? A meta-analysis of 22 non-randomized studies (there are no randomized studies) of hysterectomy in the British Journal of Surgery in 2010 (http://www.ncbi.nlm.nih.gov/pubmed/20949554) found the following:

“The available evidence shows that robotic surgery offers limited advantages with respect to short-term outcomes. However, the clinical outcomes should be interpreted with caution owing to the methodological quality of the studies.”

And another review article from Obstetrics and Gynecology International in 2011 (http://www.ncbi.nlm.nih.gov/pubmed/22190948) by a group from the Cleveland Clinic said:

“Despite the rapid and widespread adoption of robotic surgery in gynecology, there are no randomized trials comparing its efficacy and safety to other traditional surgical approaches.”

njhm posted on February 22, 2012 at 7:38 am

Dr. Luthringshausen,

Thanks for the interesting discussion. But, a couple notes.

The argument that the Davinci doesn’t increase costs is a common held fallacy. Although I agree that physicians or hospitals aren’t directly reimbursed more for robotic cases, proliferation of the robot indirectly increases cost/reimbursement inflation for these procedures. When hospitals increase charges for a robotic case, Medicare uses these charges to determine future Medicare weightings/rates. So the higher charges cause future Medicare rates to be higher. Since commercial insurers base their reimbursement rates off Medicare rates, these rates go up as well. Since ’04, Medicare prostate rates have grown +18% above Medicare inflation and hysterectomy rates +15% above inflation. So the robot is causing huge reimbursement inflation in these areas in order to allow hospitals to cover the cost of the robot. And this ignores the over-utilization that the robot is causing – see http://www.nejm.org/doi/full/10.1056/NEJMp1006602

I also think you’ll find two articles published in this month’s Journal of Clinical Oncology from your peers at MGH and Columbia interesting (see below). Like Skeptical Scalpel, I continue to struggle to find the data that shows that the robot actually improves outcomes for patients. But, I’d be very happy to be proven wrong.
http://jco.ascopubs.org/content/early/2012/01/30/JCO.2011.36.7508.abstract
http://jco.ascopubs.org/content/30/5/513.abstract
http://www.hopkinsmedicine.org/news/media/releases/hospitals_misleading_patients_about_benefits_of_robotic_surgery_study_suggests

I also think an article from the Chicago Tribune last week sums it up pretty nicely (http://ht.ly/96K22). This explains a lot of what is wrong with our current healthcare system.

“For example, a 50 percent increase in the number of surgeries to remove men’s prostate glands in the United States from 2005 to 2008 was driven by the adoption of robotic-assisted laparoscopic prostatectomy, according to a study presented at the American Urological Association meeting last May.

Prostatectomies performed by the $1.5 million robot, manufactured by Intuitive Surgical, accounted for 80 percent of such surgeries in 2008, up from 15 percent four years earlier. The increase in prostatectomies came at a time when the incidence of prostate cancer decreased.

“When hospitals buy robots they also use them as a marketing tool in direct-to-consumer marketing. That started with the drug companies and it worked well. It’s very effective,” said Dr. Hugh Lavery, a urologist at Mount Sinai Medical Center in New York who authored the study.

“Surgeons are paid more to do prostatectomy than to occasionally biopsy someone. There’s pressure from the (hospital) administration. They’ll say, ‘We just bought this thing, why aren’t you using it?’ It’s kind of like if you buy your kid an Xbox and he doesn’t use it,” said Lavery.”