The price of surgery: markup of operative procedures in the United States

J Surg Res. 2017 Feb;208:192-197. doi: 10.1016/j.jss.2016.09.032. Epub 2016 Sep 28.

Abstract

Background: Despite cost containment efforts, the price for surgery is not subject to any regulations. We sought to characterize and compare variability in pricing for commonly performed major surgical procedures across the United States.

Methods: Medicare claims corresponding to eight major surgical procedures (aortic aneurysm repair, aortic valvuloplasty, carotid endartectomy, coronary artery bypass grafting, esophagectomy, pancreatectomy, liver resection, and colectomy) were identified using the Medicare Provider Utilization and Payment Data Physician and Other Supplier Public Use File for 2013. For each procedure, total charges, Medicare-allowable costs, and total payments were recorded. A procedure-specific markup ratio (MR; ratio of total charges to Medicare-allowable costs) was calculated and compared between procedures and across states. Variation in MR was compared using a coefficient of variation (CoV).

Results: Among all providers, the median MR was 3.5 (interquartile range: 3.1-4.0). MR was noted to vary by procedure; ranging from 3.0 following colectomy to 6.0 following carotid endartectomy (P < 0.001). MR also varied for the same procedure; varying the least after liver resection (CoV = 0.24), while coronary artery bypass grafting pricing demonstrated the greatest variation in MR (CoV = 0.53). Compared with the national average, MR varied by 36% between states ranging from 1.8 to 13.0. Variation in MR was also noted within the same state varying by 15% within the state of Arkansas (CoV = 0.15) compared with 51% within the state of Wisconsin (CoV = 0.51).

Conclusions: Significant variation was noted for the price of surgery by procedure as well as between and within different geographical regions. Greater scrutiny and transparency in the price of surgery is required to promote cost containment.

Keywords: Charges; Cost containment; Costs; Hospital markup.

Publication types

  • Comparative Study

MeSH terms

  • Fees and Charges / statistics & numerical data*
  • Humans
  • Retrospective Studies
  • Surgical Procedures, Operative / economics*
  • United States