The media has paid a lot of attention to physician compensation recently as a means to decrease the cost of care, but among spine patients — even surgical patients — the surgeon's compensation is just a small piece of a huge pie.
Other costs to consider in the global cost of care for spine surgery include:
• Hospital stays
• Implant costs
• Biologics
• Staff salaries
• Anesthesia
• Postoperative care
• Physical therapy/rehabilitation
"The physician renumeration is among the smallest components of the total cost of care," says Kern Singh, MD, Co-Director of the Minimally Invasive Spine Institute at Rush in Chicago. "The hospital and nursing costs are fixed, and implant costs, instrumentation and biologics for fusion are expensive. For single-level lumbar fusion, costs are three to four times higher than what the surgeon is paid. Ultimately the implant manufacturers are soaking up a big portion of the payment."
Dr. Singh sits on the hospital implant formulary/finance committee at Rush University Medical Center and along with his colleagues he is considering several tactics to lower implant costs, including limiting the number of implant choices and negotiating reduced contracts based on volume. "We are placing them on a formulary — a screw is a screw is a screw," says Dr. Singh. "It doesn't matter what the tweak is. The screw has to meet a specific price point or we won't buy it."
Device companies sometimes charge a premium for a new coating or different thread pattern, but Dr. Singh has experience negotiating down costs from $3,000 to $1,000 by rejecting these small changes. "In India, which is the largest free market society, there are commodity prices for these screws, and they are charged $50 per screw," he says. "In the United States, the spinal implants haven't been driven down until recently. Now hospitals are becoming smarter and negotiating a volume-based price and formulary to pay what the screw is worth."
Dr. Singh estimates the cost breakdown as:
• Fixed costs (including surgery, hospitalization, nursing, physical therapy, imaging, postoperative care): 55 percent to 60 percent
• Implant costs: 20 percent to 25 percent
• Physician payment: 20 percent
"You can see in the pie that it's disproportionately divided," Dr. Singh says. "In the larger surgical cases cases I do, by the time it's all divided the device company made more than I did on the case."
Even so, spine surgeons have taken much of the blame for these high costs by using implants without regard to their price; ordering potentially unnecessary or duplicate imaging studies (sometimes to cover medical liability; other times due to treatment preference or miscommunication with other specialists); performing procedures that require long hospital stays; having complications that require additional treatment; and prescribing costly medication or therapy.
"One of the problems really is that physicians direct the care, but a lot of times the generated costs and outcomes don't directly affect him so he doesn't know how to be efficient," says Hyun Bae, MD, medical director and director of spine education ad Cedars-Sinai Spine Center in Los Angeles. "Certainly there are things surgeons can do to reduce these costs, but currently we are not really connected to the patient's care in that way."
As risk-sharing models become more popular, however, surgeons are taking a seat at the table to learn these indirect costs and fuel change toward quality, yet cost-effective care. Some are becoming members of large independent groups to help manage risk among many specialists; others have taken on leadership roles at their hospital departments to reduce risk for an accountable care organization or other risk-sharing models.
"There are opportunities to reduce cost now because surgeons are directly responsible for making the decisions that will delivery quality care at a lower price," says Dr. Bae. "That's what hospitals want to do but it's very hard at this stage to figure that out unless there is some cooperation with the people who are directing the cost. Now the metrics we see are around physician costs, and if one surgeon has higher costs than another, the physician's employment is at risk. That physician will have to become more efficient in what he does."
Protocol standardization is one way hospitals and physician groups are taking control over costs, and digital technology allows providers to collect data on the most efficient and effective way to treat patients. But at the end of the day, surgeons still need flexibility to treat patients depending on their unique needs.
"While most patients can be put in a clinical pathway, there are sometimes complications," says Dr. Bae. "But I don't think there will be much push back to following the protocol unless we aren't delivering quality."
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