In 2006, the American Academy of Orthopaedic Surgeons (AAOS) and the Orthopaedic Trauma Association (OTA) released position statements addressing on-call coverage and the provision of orthopaedic emergency care1,2. This action was prompted by the nationwide crisis occurring in access to trauma care. Over the past decade, there has been an ever-increasing number of patients seeking emergency care, a decrease in the total number of hospital emergency rooms, a steady decline of specialists available to take call, and a shortage of hospital resources to support emergency orthopaedic care1,3. The AAOS and OTA position statements call for emergency operating-room access twenty-four hours a day and 365 days a year, operating-room staffing, one physician assistant per full-time-equivalent orthopaedic surgeon, reliable image intensifiers and dedicated radiology technicians, funded call support coverage, available implant systems, support for a research coordinator, funds for continuing medical education, and clinic facilities. In exchange for these resources, the surgeons agree to provide full-time coverage and promise to see all trauma patients within a specified period of time. These position statements also call for an appointed trauma director to provide quality assurance, direction, and commitment to limit variation in implant use. This director will also attend a regular review of the fiscal impact of the service with the hospital administration. While these demands seem reasonable to orthopaedic surgeons who provide emergency services, hospital administrators have resisted many of these recommendations by questioning the financial viability of orthopaedic trauma services. Our objective was to demonstrate that trauma patients with orthopaedic injuries bring substantial financial reward to hospital systems and that orthopaedic trauma systems should be supported. In fact, given an appropriate demographic and payer mix, orthopaedic trauma services can actually be very profitable for a hospital system. In the process, we also hope to educate the readers about the basics of hospital finance and provide a framework for physicians to determine whether a trauma system is a viable option in a specific city or region.
The trauma registry at our institution was reviewed to capture all trauma activations from January 1, 2006, to December 31, 2006. This is a community-based, level-II, nonacademic trauma center. Institutional review board approval was obtained prior to beginning the study. The year 2006 was chosen so that financial records would be complete and all claims closed, to obtain a true financial picture. At this institution, trauma activations are characterized as blue or green in accordance with Nevada state regulation NAC (Nevada Administrative Code) 450.77 (see Table I). It must be emphasized that this does not include all patients seen for orthopaedic emergency care, such as geriatric patients with a hip fracture and patients with a distal radial fracture or ankle fracture. At our institution, these patients do not meet the trauma criteria and fall under general orthopaedic call services. The cases of these patients were excluded from our financial analysis.
From this group of trauma activations, all patients with ICD-9 (International Classification of Diseases, Ninth Revision) codes for an orthopaedic fracture diagnosis were selected as our study group. This included both patients treated as inpatients and those released as outpatients directly from the emergency room. The hospital billing department records were utilized to record hospital charges, reimbursement, and payer mix. The hospital charges for trauma activation fees, radiography, computed tomography, magnetic resonance imaging, laboratory tests, length of stay in the intensive care unit, and length of stay in the hospital were calculated. The payer mix and reimbursement rates for each group were obtained, and means and standard deviations were calculated. The patient-specific costs were taken from the hospital's internal cost accounting system and reflect the total cost of care including allocated overhead. Our hospital is staffed by private physicians who charge and collect fees outside the hospital system, and these are not included in the analysis.
Payers at our institution can be divided into seven major groups: commercial, indigent or self-pay, managed care, Medicaid, Medicare, Workers' Compensation, and automobile insurance. Commercial is defined as private nongovernmental insurance that does not have a contract with the hospital for payment at a reduced rate (the best example is Kaiser Permanente). Indigent or self-pay patients are those who have no insurance coverage. Managed-care patients have private nongovernmental insurance that contracts with the hospital for payment at a reduced rate (the best example is Blue Cross). Medicaid patients are on the state Medicaid program. Medicare patients are on the federal Medicare program, and this category includes Medicare health maintenance organization activity. Workers' Compensation patients consist of the patients who were injured on the job. Automobile insurance, the final category, includes the patients whose bills are covered by their own automobile coverage or that of others involved in the accident.
The financial data were obtained in collaboration with the hospital finance department. Once investigational review board approval was obtained, the financial department was approached with a request for the joint study. When it was made clear that the data obtained were for academic interest and were intended to assist in the development of community trauma services on a national scale, we were able to begin a joint effort. Hospital financial data were imported directly into Microsoft Excel (Redmond, Washington) for performing basic financial analysis and calculating means.
Our facility is currently the busiest nonacademic trauma center in the nation with 68,013 emergency-department admissions in 2006. In the 2006 calendar year, there were 3531 trauma activations and 1225 (34.7%) of these patients had an orthopaedic diagnosis. All patients with an orthopaedic diagnosis were included in our study. Eight hundred and eighty-one patients (72%) required admission and were treated as inpatients, while 344 patients (28%) did not sustain injuries requiring admission. These patients were recorded as outpatients. The combined data are presented in Table II. All amounts are expressed in 2006 United States dollars. Total charges were $77,719,354. Overall, these patients generated $7,420,000 in trauma activation charges, $2,424,085 in radiography charges, $12,638,411 in computed tomography charges, $612,480 in magnetic resonance imaging charges, and $3,400,270 in laboratory fees during their hospital stay. This means that a trauma patient with an orthopaedic injury generated an average of $6057 in trauma activation charges, $1978 in radiography charges, $10,317 in computed tomography charges, $500 in magnetic resonance imaging charges, and $2776 in laboratory fees. In addition, these patients also used an average of 3.6 consultations, supporting other hospital departments and physicians.
The data can also be separated into inpatient and outpatient cases for comparison. The 881 inpatients provided a net profit of $3,923,366 and an overall reimbursement rate of 38%. The mean length of stay for inpatients was 8.9 days, with an average of 3.5 days in the intensive care unit. There were a total of 7882 inpatient days with 3098 intensive-care-unit days. The total charges were $73,218,956. The computed tomography charges amounted to $10,808,139; radiography charges, $2,186,984; magnetic resonance imaging, $590,227; and laboratory charges, $3,343,433 (see Appendix).
Outpatient cases amounted to 344 patients and a $1,253,089 profit. The total charges amounted to $4,500,398, with a 42% reimbursement rate. The computed tomography charges amounted to $1,830,272; radiography charges, $237,099; magnetic resonance imaging charges, $22,253; and laboratory charges, $56,837 (see Appendix).
At our institution, the payer mix consists of 38% from automobile insurance, 17% from managed-care plans, 13% from self-pay and indigents, 8% from commercial insurance, 8% from Medicare, 8% from Medicaid, and 8% from Workers' Compensation. Their reimbursement rates at our facility are 83% for commercial insurance, 45% for managed care, 41% for automobile insurance, 31% for Workers' Compensation, 25% for Medicare, 20% for self-pay and indigents, and 15% for Medicaid. The overall reimbursement rate was 38%. Despite the belief that orthopaedic trauma is a cost center, our institution was able to realize a profit of $5,176,456 in the year 2006 from these services alone.
Our nation's emergency-care system is currently in crisis as a result of several factors. Over the past decade, the number of patients seeking emergency-care services has increased 18% from 93.4 to 110.2 million visits annually. At the same time, the number of emergency departments has decreased 12.4%. Further compounding this issue is the fact that fewer specialists have made themselves available to take call. In one survey, 42% of emergency-department administrators thought that the lack of subspecialty coverage at their institutions posed a substantial risk to patients1,3,4. Clearly, this is an issue in which government, hospitals, and physicians all need to share responsibility. Both the AAOS and OTA have released position statements on this issue, and they agree that orthopaedic surgeons are the most qualified physicians to provide emergency care for individuals with musculoskeletal injuries1,2. Therefore, as orthopaedic surgeons, we have the responsibility to create a trauma system that can provide the best care for patients and the best financial situation for hospital systems. One such system exists at our facility and has been outlined in several prior reports5,6. The data in the present study demonstrate that this system has been successful for the hospital, resulting in a hospital profit for one year of $5,176,456 that does not include any physician payments. This result may not be applicable to all cities and all regions of the country, and thus an understanding and systems analysis of hospital finance is a vital component of the discussion.
One barrier to creating trauma systems has always been the physician's lack of understanding as to where the money comes from and how it flows through the hospital. Without this knowledge, it is difficult to negotiate intelligently for designated operating rooms, equipment, and ancillary staff. One of our primary objectives for this article is to provide orthopaedic surgeons with a basic knowledge of how our system works so that it can be applied to each region or city as needed. In addition, we also hope to provide financial support for each of the recommendations made by the AAOS and OTA.
The community-based orthopaedic trauma system at our institution was the first of its kind in the United States and was organized in 1994. The growth and development of this system has been well described by us in prior reports5,6. Our center is the only regional trauma center for the northern portion of California, 450 miles (724 km) by car from the two other state trauma centers. We currently service a catchment area of more than 80,000 square miles (217,960 km2) and a population in excess of 823,000. Two-thirds of the population live in rural areas. At our institution, all orthopaedic surgeons under fifty-five years old are required to take general emergency-department call to maintain hospital privileges. On the other hand, orthopaedic trauma call is a separate call schedule created to respond to trauma activations with musculoskeletal injuries. Membership in the trauma panel is voluntary, and those who take it must meet certain qualifications and are held to specific standards of care. The orthopaedic trauma panel currently consists of twenty-one orthopaedic surgeons, four of whom are fellowship-trained in orthopaedic trauma. All physicians share in the burden of call and receive equal payment and stipends for their involvement. The contract between these physicians and the hospital is negotiated on a biannual basis. Contracting has resulted in call stipends, reimbursement for indigent care, funding for continuing medical education, dedicated orthopaedic trauma operating rooms, reliable image intensifiers, dedicated radiology technicians, and hospital salaried physician assistants (all components recommended by the AAOS and OTA position statements).
The data for this study were generated from a number of the hospital's administrative systems including the patient billing-collection system (for payment and charge data) and the cost accounting system (for cost data). Every system has its limitations and biases, and these must be understood to interpret the data. Most hospitals use a cost accounting system, and our facility is no exception. This is really a cost allocation system designed to calculate a cost for every component of a patient's episode of care (medications, supplies, diagnostic tests, room and board, etc.) with the sum of all patient costs being equal to total hospital costs as per the hospital's financial statements. The unit cost, therefore, incorporates not only the direct cost of the service but the overhead costs as well. One concern with regard to the use of data derived from the hospital's cost accounting-allocation system is that it does not represent the marginal or incremental costs of treating the patient. For example, if trauma patient X has a total cost of care of $20,000, but the patient had actually never been treated, costs (such as staff) would not have been reduced by $20,000, just by a small fraction. A good portion of these costs are true overhead and are allocated proportionally to each episode, but this is not an exact science. In the hospital environment, direct costs are only incremental over a relevant range. Hospitals have such larger fixed costs that the incremental costs of treating a patient cannot be determined exactly. However, it is commonly believed that no more than 10% of patient costs are truly incremental. The best example of an incremental cost for orthopaedic care is the cost of implants. That is why hospitals are so focused on limiting implant variability and costs. It is one of the few direct cost savings that the institution can address and document. Hospital accounting costs and charges do not always have a consistent relationship because of the heavy burden of overhead. With this in mind, the reader must understand that the charges reported in this study are the actual charges, the collections are the actual collections, and the costs are total costs, including allocated overhead, and are not the incremental costs of care. The purpose of this paragraph is merely to explain to orthopaedic surgeons that hospital bills and finances can be difficult to understand.
Under the current health-care system, perhaps the number one determinant of the financial viability of a trauma system is the payer mix. In order to understand this, orthopaedic surgeons must first have a clear understanding of each payer and how these entities pay physicians and hospitals. It is our hope that with a combination of this understanding and the data we present, a practitioner in any region of the country can roughly estimate whether a trauma system can be viable.
In our system, there are seven main payer sources: commercial, indigent or self-pay patients, managed care, Medicaid, Medicare, Workers' Compensation, and automobile insurance. Commercial is defined as private nongovernmental insurance that does not have a contract with the hospital for payment at a reduced rate (the best example is Kaiser Permanente). These patients are good payer sources for the hospital because there is no contract with their insurance carrier for reimbursement other than for billed charges. Many companies try to negotiate a reduced rate after the fact, but most are denied. The hospital benefits from increased lengths of stay for these patients, and implant charges are typically reimbursed at 100% of the charge.
Indigent or self-pay patients are those who have no insurance coverage. For indigent patients, the bill is 100% of charges, but the hospital often agrees to accept much smaller amounts depending on their financial situation. Nevada law mandates that any patient who has no insurance is entitled to a 30% discount if they pay their bill within thirty days. Because most self-pay patients represent the working poor or are truly indigent, we have adopted a medical hardship policy that is based on the family's earnings relative to poverty level and the amount due is tailored accordingly. While this is occurring, the hospital also tries to secure Medicare or Medicaid coverage for these patients. Currently, the hospital pays surgeons Medicare rates for surgical fees so that, as far as the orthopaedic surgeon is concerned, there are no "no-pay" patients. These surgical fees and the trauma stipend costs are covered by the trauma activation fees (see below).
Managed-care patients have private nongovernmental insurance that contracts with the hospital for payment at a reduced rate (the best example is Blue Cross-Blue Shield). Most of these are multiyear contracts so that both the hospital and the insurance company can plan on certain volumes and reimbursement. Every year, the contract has built-in inflation factors. For inpatient services, almost all managed-care contracts are done on a per diem rate. Implant charges are paid for at agreed-on rates as well.
Medicaid patients are on the state Medicaid program. Medicare patients are on the federal Medicare program, and this category includes Medicare health maintenance organization activity. Medicare is the only payer that reimburses on a diagnosis-related group (DRG) basis. This means that the longer the patient stays, the more it costs the hospital. Almost all managed-care contracts as well as Medicaid and Workers' Compensation have a daily rate for inpatient services. As a result, a greater length of stay for these patients can be beneficial for the hospital. However, payers will deny payment for certain days of a stay if they seem inappropriate. That is why it is important to have physician documentation in the chart to support the decision to keep the patient in the hospital. In the long run, this will help both hospital and physician reimbursement. The Medicare DRG system has three levels of DRGs for the same basic episode: one level for the basic episode, a more highly reimbursed level if the patient has complications and comorbidities, and an even more highly reimbursed level if there are major complications or comorbidities. The complications and comorbidities are based on physician documentation.
Workers' Compensation patients consist of those who were injured on the job. Workers' Compensation rates are set by the state. In Nevada, this system pays just slightly more than Medicare does. In addition, Workers' Compensation reimburses for implants in addition to per diem rates, while Medicare includes the implant cost in the DRG payment. Workers' Compensation patients may provide better reimbursement for operating-room activity. However, there are a large number of rules and procedures to follow in order to bill for Workers' Compensation. If the rules are not followed exactly, an institution will not get paid. The hospital and the physicians must hire dedicated, specialized staff to handle these claims.
Our final category of automobile insurance includes the patients whose bills are covered by their own automobile coverage or that of others involved in the accident. Automobile insurance is complex to describe. Hospitals do not contract with these insurance companies. As a result, there is no discount off the charges. These insurance policies have limits so that, if the bill exceeds the limit, the patient becomes responsible for the balance. Automobile coverage is often paid on a "first come first served" basis so the earlier physicians submit their bill the more likely they are to be paid.
Because such a large proportion of trauma patients have no payer source, hospitals have created the concept and actuality of trauma activation charges to cover the cost of providing trauma services. While every trauma patient is charged a trauma activation fee, not all payers will reimburse the hospital for this charge. Medicare, Medicaid, and Workers' Compensation carriers do not reimburse the hospital any additional monies for this charge (to clarify, this is specific to Nevada Medicaid and Nevada Workers' Compensation; these programs in other states may differ). The basic payer class that reimburses our hospital for trauma activation fees is managed care, and the managed-care carriers not only pay their share of the cost of trauma activation but also cover that cost for the indigent, Medicaid, and Medicare patients. The idea is to ensure that total trauma activation reimbursement covers the costs of providing that service (cost neutral). Specifically, using our data on trauma payer mix, our hospital determined that our activation fee needed to be $13,000 for a trauma-blue and $5,000 for a trauma-green patient. These numbers were designed to cover 100% of the standby costs of trauma, with the single largest component being physician call coverage in general surgery, vascular surgery, neurosurgery, and orthopaedic trauma. Each of the hospital's managed-care contracts specify that the carrier must reimburse us 100% of this fee as an add-on payment and, by doing so, the total monies collected in 2006 from managed-care carriers were enough to cover or offset the total standby costs of trauma care, both physician call-coverage expenses and hospital staff readiness expenses. Simply, the hospital needed to receive enough additional reimbursement from the managed-care patients to cover the entire fixed, standby costs of trauma activation. These fees were not designed to generate a profit per se.
Our medical center charged in excess of $7 million in trauma activation fees in the year 2006 and collected approximately $4 million. This is an important component of any trauma contract negotiation and clearly provides substantial revenue that funds the call stipends. If a trauma system is to be successful, the hospital system must be forceful in negotiating these stipends to support all physicians involved. The hospitals then have a revenue stream and the physicians' call pay is supported. This is also worthwhile for the insurance providers because, without a contract for trauma, they would be subject to 100% of the charges just as commercial noncontracted payers are. Without orthopaedic surgeons who are willing to take trauma call, hospitals would not be able to designate themselves as trauma centers and would not have access to this revenue stream.
In our system, financial support for specific components of the AAOS and OTA recommendations is provided in the following ways.
1. Funded Call Support Coverage
Financial support for orthopaedic trauma care at our institution consists of three main components: a call stipend, an emergency-department "inconvenience or contact" fee, and guaranteed surgery reimbursement for nonpaying patients. The call stipend is intended to pay for surgeon availability. Over the past several years, orthopaedic surgeons have negotiated rates for stipends to cover trauma call. At our institution, the stipend is $2400 per day, which amounts to a hospital yearly cost of $876,000. An additional $100 per day is also provided to pay clinic costs associated with on-call patients, amounting to $36,500 per year.
As stated previously, participation in general orthopaedic emergency-department call is required for all physicians who are less than fifty-five years old to maintain hospital privileges. As a result, no stipend is offered to take general orthopaedic call. To provide incentive for surgeons to respond to calls, the concept of an emergency-department contact fee was created. The emergency-department contact fee at our institution is $200 paid for each consultation seen in the emergency department. The idea behind this is to cover the extra costs that physicians must absorb when treating indigent patients. This includes the extra liability, clinic costs for follow-up care, and the opportunity costs associated with not being able to provide care for elective patients on the day of and day after being on call.
Finally, the surgical guarantee for payment consists of assured reimbursement for surgical services for indigent care. Many institutions have similar arrangements, which are usually set as a percentage of Medicare rates. At our institution, this rate is set at 100% of the Medicare rate. Clearly, this is reasonable for an institution making in excess of $5 million from orthopaedic trauma services. This also is always within budget, provided that the trauma activation fee has been negotiated correctly to cover "standby" costs.
2. Designated Orthopaedic Trauma Operating Room
There is abundant information on the positive effects of designated orthopaedic trauma operating-room availability. Nevertheless, many hospitals have fought against the proposals for dedicated orthopaedic trauma operating rooms. They have cited lost opportunity costs when the room remains empty and have complained that most of the patients treated are indigents. Our data clearly demonstrate that this is not the case. Many payers reimburse on the basis of DRGs, which include a set number of hospital days. As a result, it is in both the hospital and the surgeon's best interest to treat patients operatively as expediently as possible with the lowest morbidity and mortality. Designated trauma rooms have been shown by many authors to do just this. Elder et al. showed decreased morbidity and mortality in 701 elderly patients treated for a displaced subcapital hip fracture7. Bhattacharyya et al. showed a dramatic reduction in operative times and complication rates. A 6% reduction in overutilization of operating rooms was also noted8. Although total operating-room charges and costs are obtainable, reimbursement is based or made at the episode level and not at the department or service level. However, since our overall reimbursement rate is 38% of charges, we can safely assume that this is profitable as our costs are clearly lower than 38% of charges. Any further analysis would be subjective. Again, and in fairness, hospitals often point out that dollars are lost when they are not able to provide care for elective patients because elective operating-room space is being taken up by indigent patients in a dedicated trauma operating room, particularly in the daytime on weekdays. While this number is difficult to calculate, it may merit some consideration and will be the subject of future study.
3. Physician Assistant Support
In private practice, physician extenders are vital to enable orthopaedic surgeons to cover the emergency department while performing urgent operative intervention or attending to other issues. Many academic institutions have also begun hiring physician extenders in response to resident work-hour restrictions9,10. In our model, physician assistants in the emergency department triage patients, place splints, dictate histories and findings on physical examinations, coordinate care with other physicians, and attend general surgery and intensive-care-unit rounds to expedite care. Although hard to quantify, this effort certainly facilitates triage, frees up emergency-department beds, shortens operative time, decreases length of stay, and improves morbidity rates. Miller et al. examined the use of physician assistants as trauma care extenders and found that the transfer time to the operating room decreased 43%, the transfer time to the intensive care unit decreased 51%, the transfer time to the hospital ward decreased 21%, and the length of stay for admissions decreased 13%11. Physician assistants can also bill for their services as first assistants or under the supervising physician when performing fracture reductions or placing splints. According to the American Academy of Physician Assistants, the average salary for new graduates in 2007 was $83,084 and the average salary for new graduates in Nevada was slightly higher at $102,522 for one full-time position12. At our institution, we have two physician assistants who each work three twelve-hour shifts per week, but their total charges for 2006 were $549,986. Their reimbursement rate was only 13%. Over the past two years, improvements in billing have increased reimbursement rates slightly and, currently, just over 50% of their costs are covered (salary and benefits). Many authors have described the benefit of these services and outlined their value13-15.
4. Guaranteed Reimbursement
In order to continue to provide care, orthopaedic surgeons should receive some form of reimbursement for indigent care. Some of the fiduciary responsibility should be borne by the hospital as well as the government. It is clear to both the AAOS and OTA that the government needs to take a greater responsibility in emergency medical care. At our institution, the trauma activation fee exists to help to cover the costs of uninsured, Medicare, and Medicaid patients who sustain injuries. Our hospital charged $7,420,000 in trauma activation fees to cover costs in 2006. This suggests that governmental programs are inadequate to support the growing amount of trauma care. As a result, federal, state, and local governments must either bolster state Medicaid programs so they can pay reasonable rates for trauma or create new sources to finance emergency care for underinsured patients. One way to effect change is to support state medical societies who fund lobbyists and form political action committees to stand up for their important issues.
5. Reliable Available Image Intensifiers and Radiology Technicians
The AAOS and OTA position statements also called for adequate radiographic support with regard to fluoroscopic machines and radiology technicians. The cost of a new image intensifier is around $160,000, and the salary of a radiology technician is between $25 and $35 an hour. It is estimated that it would require a 0.5 full-time-equivalent allocation to provide imaging and to staff two operating rooms each day. This equates to about $20,000 to $40,000 per year. For patients with noncontracted insurance, the radiology department charges for intraoperative fluoroscopy services. At our facility, the charge is $556 for less than one hour and $900.50 for service of greater than one hour. Unfortunately, the specific operating-room data were not available for review. Our data demonstrate a massive amount of support for the hospital radiology department, amounting to $2,424,083 in radiology charges, $12,638,411 in computed tomography charges, and $612,480 in magnetic resonance imaging charges. This does not include the charges of the radiologists to interpret the radiographs and other studies as these individuals are private practitioners in our model. The radiology department also bills for intraoperative fluoroscopy time, and orthopaedic trauma patients are the highest user of this service. Clearly, these charges far outweigh the cost of an available radiology technician and a working image intensifier.
6. Available Implant Systems
Having the appropriate equipment in the operating room for orthopaedic trauma patients is vital to success. As technology improves, implant costs will most likely continue to rise. Orthopaedic surgeons must assume some responsibility to help to control costs. By working together with operating-room staff and hospital purchasing departments, inventory can be decreased. It is our belief that vendor competition should always exist to uphold service standards and competitive pricing. Decreasing inventory to two nail systems, two plate systems, and two types of external fixators can result in substantial savings. Many companies offer discounts for certain volumes and/or exclusivity deals. These savings can be beneficial to both the orthopaedic surgeon and the hospital system. Fewer systems mean more familiarity with equipment. This should, in theory, help to expedite cases, reduce errors, and improve turnover. At our institution, the major trauma equipment vendors have offered 40% discounts to become one of the designated implant companies. Our facility had just over $3 million in trauma implant costs in 2006. If only 20% savings was able to be achieved, the hospital could save $600,000.
7. Continuing Medical Education Support
Our institution currently provides $1000 per year for the term of the contract to each physician on the trauma panel to attend a trauma-focused meeting. Currently, there are twenty-one physicians on the trauma panel. Although it is hard to quantify, if one complication is prevented each year by the acquisition of knowledge, these costs more than pay for themselves.
8. The Financial Role of the Orthopaedic Surgeon
According to OTA recommendations, only the trauma director should be responsible for administrative financial review. It is our belief that this is not sufficient. All orthopaedic surgeons should perform regular reviews of the fiscal impact of the service with hospital administration. A mutual understanding is beneficial for both parties. Once orthopaedists understand how simple changes can benefit the system, most are happy to change their behavior. For example, simple changes in documentation can result in thousands of dollars in increased revenue, and clear documentation can enable hospitals to collect payment for longer lengths of stay, the treatment of complications, and increased acuity of care. Medicare rates for hospitals are negotiated on the basis of case complexity and level of care. By simply describing the patient's comorbidities, such as diabetes, obesity, or hypertension, in the medical record, in addition to the fracture diagnosis, the hospital can increase its reimbursement. Regulating implant usage is also a huge cost-control center and can provide mutual benefit to hospitals, patients, and orthopaedic surgeons alike.
9. Other Issues
The position statements also call for the provision of clinic facilities to follow patients after discharge with adequate radiology capacity and nurse staffing. This currently does not exist in our institution, and the financial impact of the postoperative care of self-pay patients certainly falls on the orthopaedic surgeons. All radiographs, casting supplies, and durable medical equipment required for adequate follow-up for many patients exceed the payment received for the operative procedure. This can make it very difficult for an orthopaedic surgeon to provide care for these patients. Therefore, the provision of well-staffed outpatient clinic space is a reasonable request.
Several recent publications have attempted to address the issue of orthopaedic trauma services and hospital finance16,17. Each has done so from a different financial perspective, which makes them difficult to compare. However, their findings and implications are valuable. Ziran et al. demonstrated that a dedicated hospital-based, single-surgeon, orthopaedic trauma service at an academic level-I trauma center can be a financially viable program that adds to the hospital contribution margin16. Vallier et al. demonstrated that the majority of charges and revenue fell on the hospital side of the ledger17. They developed the concept of an orthopaedic charge multiplier, demonstrating that for every dollar of orthopaedic professional charge, the hospital facility charge was $3.86. In addition, the net revenue multiplier was used to take collection rates into account. This calculation found that for every dollar of revenue generated by an orthopaedic surgeon, the hospital generated $7.81. These data may not be true in every hospital or trauma system. In both of these cases, the surgeons involved were employed by the hospital, which creates a different economic situation. In addition, the payer mix was different at each institution.
Because our system is a community-based system and a private practice model, it would be almost impossible to calculate professional charges. All emergency-room physicians, orthopaedic surgeons, trauma surgeons, neurosurgeons, anesthesiologists, and radiologists are physicians in private practices not employed by the hospital. Our study data purely address the facility charges and collections generated by trauma patients with orthopaedic injuries. Without musculoskeletal trauma care, the hospital would need to transfer these patients to other facilities and would lose this income.
Our data reinforce the conclusions made by both Ziran et al. and Vallier et al. that the provision of orthopaedic trauma services can be financially viable for the institution with regard to facility charges and contribution margin. In addition, this study demonstrates that such results are not limited to a level-I academic setting with hospital-based traumatologists and highly integrated systems. Well-organized community-based trauma systems can also be profitable for hospitals, given the appropriate payer mix. By separating out the facility charges, we have been able to demonstrate support for the AAOS and OTA recommendations.
The data provided in this analysis clearly demonstrate that the Renown Regional Medical Center Orthopaedic Trauma Service is a financially stable venture, which not only supports physicians but provides the hospital with profits in excess of $5 million per year. Such profits may not be possible in every region or city in the United States; however, we believe that the provision of orthopaedic trauma care is the duty of the orthopaedic community and should be pursued. By utilizing our data, we hope that physicians considering the creation of a trauma system or those in active negotiation will be able to look at the demographics of their own city or region and run an analysis to assess viability.
In order to determine whether a trauma system will be a financially viable entity, it is extremely important to understand the demographics and payer mix for each region. In some areas, it stands to be very profitable, while in other regions it may always be a money-losing venture. Surgeons and hospital administrators must work together to use payer mix, reimbursement rates, and trauma volume to determine whether a system will be economically viable. Once viability has been determined, the AAOS and OTA standards described in their 2006 position statements and the experience of our trauma system can be used as a model for the future development of a hospital trauma program. Physicians, hospitals, and government must all take some responsibility in finding a solution to this dilemma.
Tables presenting the financial details on an inpatient and outpatient basis can be found with the electronic versions of this article, on our web site at (go to the article citation and click on "Supplementary Material") and on our quarterly CD/DVD (call our subscription department, at 781-449-9780, to order the CD or DVD).
American Academy of Orthopaedic Surgeons. Position statement. On-call coverage and emergency care services in orthopaedics. AAOS Bull.2006;54.54
2006
Orthopaedic Trauma Association. On-call position statement. AAOS Bull.2006:54.54
2006
Beaty JH, Fine RC, Porucznik MA. Meeting the challenge: orthopaedists on-call. AAOS Bull.2006;54:28.5428
2006
Bosse MJ, Henley MB, Bray T, Vrahas MS. An AOA critical issue. Access to emergent musculoskeletal care: resuscitating orthopaedic emergency-department coverage. J Bone Joint Surg Am.2006;88:1385-94.881385
2006
[PubMed][CrossRef]
Bray TJ. Design of the Northern Nevada Orthopaedic Trauma Panel: a model, level-II community-hospital system. J Bone Joint Surg Am.2001;83:283-9.83283
2001
[CrossRef]
Bray TJ, Althausen PL, O'Mara TJ. Growth and development of the Northern Nevada Orthopaedic Trauma System from 1994 to 2008: an update. J Bone Joint Surg Am.2008;90:909-14.90909
2008
[CrossRef]
Elder GM, Harvey EJ, Vaidya R, Guy P, Meek RN, Aebi M. The effectiveness of orthopaedic trauma theatres in decreasing morbidity and mortality: a study of 701 displaced subcapital hip fractures in two trauma centres. Injury.2005;36:1060-6.361060
2005
[CrossRef]
Bhattacharyya T, Vrahas MS, Morrison SM, Kim E, Wiklund RA, Smith RM, Rubash HE. The value of the dedicated orthopaedic trauma operating room. J Trauma.2006;60:1336-41.601336
2006
[CrossRef]
Harris CM, Evarts CM. The relationship of physician assistants to an orthopedic residency program. Clin Orthop Relat Res.1990;252:252-61.252252
1990
Schneider JR, Coyle JJ, Ryan ER, Bell RH Jr, DaRosa DA. Implementation and evaluation of a new surgical residency model. J Am Coll Surg.2007;205:393-404.205393
2007
[CrossRef]
Miller W, Riehl E, Napier M, Barber K, Dabideen H. Use of physician assistants as surgery/trauma house staff at an American College of Surgeons-verified Level II trauma center. J Trauma.1998;44:372-6.44372
1998
[CrossRef]
DeLamielleure JL. The impact of surgical physician assistants on the delivery of modern healthcare. Best Pract Benchmarking Healthc.1997;2:136-41.2136
1997
Crane SC. The value of physician assistants in the modern surgical setting. Arch Surg.1999;134:575.134575
1999
[CrossRef]
Nyberg SM, Waswick W, Wynn T, Keuter K. Midlevel providers in a Level I trauma service: experience at Wesley Medical Center. J Trauma.2007;63:128-34.63128
2007
[CrossRef]
Ziran BH, Barrette-Grischow MK, Marucci K. Economic value of orthopaedic trauma: the (second to) bottom line. J Orthop Trauma.2008;22:227-33.22227
2008
[CrossRef]
Vallier HA, Patterson BM, Meehan CJ, Lombardo T. Orthopaedic traumatology: the hospital side of the ledger, defining the financial relationship between physicians and hospitals. J Orthop Trauma.2008;22:221-6.22221
2008
[CrossRef]