Opportunity cost: a systematic application to surgery

Surgery. 2009 Jul;146(1):18-22. doi: 10.1016/j.surg.2009.03.027. Epub 2009 May 30.


Background: Opportunity cost is the potential gain or loss when a person chooses to perform an activity over its next best alternative. With respect to surgery, opportunity cost can occur if a less efficient technology uses more operating time than its next best alternative. This additional operating time could be used in a productive way that, when economically valued, adds a "cost" to the less efficient technology. Although fundamental to the economist's view of costs and widely used in economic assessments, opportunity cost analysis is infrequently used in economic evaluation of surgical technology. Previous cost comparison studies in the surgical literature have not addressed opportunity cost when estimating the efficiency of competing technologies. With increasing healthcare costs and new technologic advancements in surgery, a surgeon's ability to understand opportunity cost and apply it when choosing between two comparable technologies is essential. Our objective is to present a system to estimate the opportunity cost for given surgical specialties and present a model to demonstrate its principle.

Methods: To demonstrate the principle of opportunity cost, our model used a hypothetical scenario comparing two clinically equivalent technologies that differed in that the use of one device (Device A) extended operating time in a hypothetical procedure by 30 minutes compared to its competitor device (Device B). How this extra operating time could potentially be used was then valued using the opportunity cost calculated by our study design. Our study design included 5 surgical procedures from 5 surgical specialties that were elective, profitable, high-volume (performed more than 100 times per year), and had a duration of less than 240 minutes. The data were taken from a university hospital setting in 2007 and included procedure volume, profit margin, and duration. The outcome measure was opportunity cost, which was estimated by dividing the selected procedure's profit margin by its duration.

Results: Surgical specialty results are presented in the accompanying Tables. Otolaryngology has the highest opportunity cost at $38/min. This cost was calculated by using myringotomy as the procedure that was elective, short in duration, performed in high volume, and provided the highest profit margin. By applying our model, the otolaryngology surgeon using the less efficient Device A to perform a hypothetical procedure would incur an opportunity cost of $1,140 ($38/min x 30 min). This is because he could have performed additional myringotomy procedures in the time saved had he instead used the more efficient Device B in his hypothetical cases. General surgery has the lowest opportunity cost at $9/min; laparoscopic inguinal hernia repair was the procedure used for its calculation. Under the same model, the general surgeon using Device A would incur an opportunity cost of $270 ($9/min x 30 min). This is because the general surgeon could have performed additional laparoscopic femoral/hernia repairs had she used the more efficient Device B in her hypothetical cases.

Conclusion: In acknowledging opportunity cost, a surgeon can more accurately compare the efficiency of competing surgical devices. This comparison is carried out by estimating and applying a dollar amount to the potential utility of time created by the use of the less efficient device.

MeSH terms

  • Cost-Benefit Analysis
  • Costs and Cost Analysis
  • Decision Support Techniques*
  • General Surgery / economics*
  • General Surgery / methods*
  • Health Care Costs
  • Humans
  • Models, Economic*
  • Orthopedics / economics
  • Orthopedics / methods
  • Otolaryngology / economics
  • Otolaryngology / methods
  • Practice Patterns, Physicians' / economics*
  • Surgery, Plastic / economics
  • Surgery, Plastic / methods
  • Urology / economics
  • Urology / methods