Correspondence  |   June 2006
The Elephant in the Operating Room
Author Notes
  • The University of Iowa, Iowa City, Iowa.
Article Information
Correspondence   |   June 2006
The Elephant in the Operating Room
Anesthesiology 6 2006, Vol.104, 1342. doi:
Anesthesiology 6 2006, Vol.104, 1342. doi:
In Reply:—
Dr. Metz explains that differences in surgical time among individuals and institutions can be very large, markedly affecting anesthesia group revenue per operating room (OR). This point is so much not under debate that anesthesiologists are paid based on anesthetic time, unlike surgeons and other physicians. German hospitals are describing encouraging success with using transfer pricing so that reimbursement is based just on the surgical time.1,2 
Depending on the vagaries of reimbursement, sometimes payment based on anesthesia time is insufficient to compensate an anesthesia group fully for slower surgeons (e.g.  , revenue per hour is less than costs per hour).3 This is precisely why Amr Abouleish et al.  3 developed the methodology that affected anesthesia groups can apply or have applied for quantification of these differences (e.g.  , to explain to stakeholders why group profits are less than expected). For many anesthesia groups, though, the larger financial problem in having variability in OR times among surgeons is the resulting empty but staffed OR time. Statistically developed staffing plans perform well at reducing such variation, thereby increasing anesthesia group productivity and profits. The methods can also be used to calculate an appropriate stipend for the anesthesia group based on the empty but staffed OR time.4 
Dr. Metz suggests that “Hospitals might consider rewarding surgeons who can, for example, perform a routine laparoscopic cholecystectomy in 45 min and retraining surgeons taking 3 h for the same procedure.” Dr. Metz addresses a concept that I too5 thought was logical. However, scientific research found this argument to be economically irrational.
First, rewards of additional resources cannot and should not relate to individual patients, but rather a surgeon's overall impact on a hospital.6 The majority of hospital costs are fixed.7 Therefore, contribution margin (i.e.  , revenue minus variable costs) invariably6–8 averages at least $1,600 per OR hour for a cholecystectomy. Regardless of whether the general surgeon works fast or slowly, on average the hospital increases profit by doing his or her cases. This is important, because hospitals need excess of revenue to costs (i.e.  , profit) to buy information systems (e.g.  , anesthesia information management systems), to buy equipment (e.g.  , anesthesia machines), and to provide financial support to physicians (e.g.  , anesthesiologists available in-house for obstetrics and trauma).
Second, if facilities were to select surgeons to be rewarded with more resources based on production, speed in performing cases would likely have little influence. Because of differences in fixed costs (e.g.  , perfusion), reimbursement (e.g.  , many patients without insurance), and/or implant costs (e.g.  , cochlear implant), contribution margins per OR hour consistently vary among subspecialties by more than 1,500%. The surgeon's subspecialty is the key issue. This is like a comparison of stocks for rebalancing one's portfolio9 —economic return often depends more on a company's industry and market than on how well the company executes. The decision of whether to provide more resources to one general surgeon performing cholecystectomies versus  another is of small financial importance as compared with the comparison of a general surgeon to a cardiac surgeon. The financial argument is even stronger when considered for facilities without incremental reimbursement for each patient (e.g.  , Canada).10 Regardless of whether a breast surgeon is fast or slow, the money spent in a day of OR time is insignificant relative to a spinal surgeon. If preferred, these tactical analyses can also be considered in terms of value to society by using cost utility (e.g.  , cataract replacement vs.  bariatric surgery).
The University of Iowa, Iowa City, Iowa.
Kuntz L, Vera A: Transfer pricing in hospitals and efficiency of physicians: The case of anesthesia services. Health Care Manag Rev 2005; 30:262–9Kuntz, L Vera, A
Schuster M, Standl T, Reissmann H, Kuntz L, Am Esch JS: Reduction of anesthesia process times after the introduction of an internal transfer pricing system for anesthesia services. Anesth Analg 2005; 101:187–94Schuster, M Standl, T Reissmann, H Kuntz, L Am Esch, JS
Abouleish AE, Dexter F, Whitten CW, Zavaleta JR, Prough DS: Quantifying net staffing costs due to longer-than-average surgical case durations. Anesthesiology 2004; 100:403–12Abouleish, AE Dexter, F Whitten, CW Zavaleta, JR Prough, DS
Abouleish AE, Dexter F, Epstein RH, Lubarsky DA, Whitten CW, Prough DS: Labor costs incurred by anesthesiology groups because of operating rooms not being allocated and cases not being scheduled to maximize operating room efficiency. Anesth Analg 2003; 96:1109–13Abouleish, AE Dexter, F Epstein, RH Lubarsky, DA Whitten, CW Prough, DS
Dexter F, Macario A, Cerone SM: Hospital profitability for a surgeon's common procedures predicts the surgeon's overall profitability for the hospital. J Clin Anesth 1998; 10:457–63Dexter, F Macario, A Cerone, SM
Dexter F, Ledolter J, Wachtel RE: Tactical decision making for selective expansion of operating room resources incorporating financial criteria and uncertainty in sub-specialties' future workloads. Anesth Analg 2005; 100:1425–32Dexter, F Ledolter, J Wachtel, RE
Macario A, Dexter F, Traub RD: Hospital profitability per hour of operating room time can vary among surgeons. Anesth Analg 2001; 93:669–75Macario, A Dexter, F Traub, RD
Dexter F, Blake JT, Penning DH, Lubarsky DA: Calculating a potential increase in hospital margin for elective surgery by changing operating room time allocations or increasing nursing staffing to permit completion of more cases: A case study. Anesth Analg 2002; 94:138–42Dexter, F Blake, JT Penning, DH Lubarsky, DA
Dexter F, Ledolter H: Managing risk and expected financial return from selective expansion of operating room capacity: Mean-variance analysis of a hospital's portfolio of surgeons. Anesth Analg 2003; 97:190–5Dexter, F Ledolter, H
Dexter F, Blake JT, Penning DH, Sloan B, Chung P, Lubarsky DA: Use of linear programming to estimate impact of changes in a hospital's operating room time allocation on perioperative variable costs. Anesthesiology 2002; 96: 718–24Dexter, F Blake, JT Penning, DH Sloan, B Chung, P Lubarsky, DA