Healthcare Economics

The hidden cost of healthcare
due to inefficiencies and errors


Operating Room – OR

Retained Surgical Instrument – RSI

Sterile Processing & Distribution – SPD

Surgical Procedures
The time to inventory surgical items can take between 30-60/min at an average cost of $75/min(1)

Accounting for surgical sponges alone constitutes 14% of operative time on average(2)
Errors Happen
On average 12.5% of surgical procedures have a discrepancy i.e. incorrect count, item misplacement, or documentation error. This can lead to an extra 20 minutes of OR time (2)(3).
RSI's Occur 1 in 100 to 1 in 5,000 procedures
This can lead to over $1 Billion dollars of litigation brought onto the healthcare system(4)(5).
Hospital Acquired Conditions Program
The HAC Program penalizes hospitals for failing to eliminate preventable medical errors and complications (Geisinger Health Systems fined $1.7 Million for failure to adhere to new guidelines)(8)
Ultimate Price
From 2005-2012:
16 Deaths resulted from RSI's(7)
Costs Associated With Each Incident
Legal Defense-$43,258(4) Malpractice Settlement(avg) - $327,726(5) RSI Retrival Procedure - $77,512(6) Total Cost - $448,496
Excessive Instrumentation
SPD departments in hospitals compile surgical sets that have redundant instrumentation, with a majority of those items being unused. Most Surgeries have less than 20% instrument utilization leading to unnecessary costs (12).
Cost to Process Item
It costs $.59 - $11.52 to process an item i.e. sterlize and package(9)(10)

Reducing the volume of excess instrumentation sent through sterile supply processing could lead to savings ranging from $70,000 - $150,000 a year (13)
This Exponentiates the cost of healthcare
Total health care spending in the United States is expected to reach $4.8 trillion in 2021, up from $2.6 trillion in 2010 and $75 billion in 1970. To put it in context, this means that health care spending will account for nearly 20 percent of gross domestic product (GDP), or one-fifth of the U.S. economy, by 2021(14)
Total Hidden Costs
The average hospital performs 150 procedures a week(15). Note: 51.4M procedures / 5,686 hospitals / 52 weeks

Remove 15 minutes(minimally) inventorying items multiplied by 150 procedures= 2,250 extra minutes(multiplied) by $75/min=$168,750)

18.75 procedures with a discrepancy multiplied by 20 mins=375 minutes(multiplied by $75/min=$28,125)

Total Excess costs & resources wated in one week.....$196,875

Prevent (1) RSI incidents/year =$448,496

Improving efficiency with Data Metrics

Tracking Instrument Utilization offer significant benefits in the surgical department including:

  • Reducing Sterilization Cycles
  • Creating Uniformity amongst surgeons
  • Optimizing surgical supply management and sterile processing and distribution
  • Reducing instrument turnover, instrument loss, and reducing shrink
  • Benchmarking surgical procedure to enhance patient care

For a typical hospital with an 8-hour surgical day, each 1 percent improvement in OR efficiency is a savings of more than $50,000 per year/per OR; for mid-sized to larger hospitals, that is $500,000 if they have 10 ORs (16).

Creating a 10% increase in operating room efficiency can save a hospital up to $5,000,000/year

  1. Rebuck, David A., et al. “Simple modifications in operating room processes to reduce the times and costs associated with robot-assisted laparoscopic radical prostatectomy.” Journal of Endourology 25.6 (2011):955-960.
  2. Christian, Caprice K., et al. “A proscpective study of patient safety in the operating room.” Surgery 139.2 (2006): 159-173
  3. Gibbs, Verna C. “Thinking in three’s: changing surgical patient safety practices in the complex modern operating room.” World journal of gastronterology: WJG 18.46 (2012): 6712.
  4. Macario A. What does one minute of operating room time cost? J Clin Anesth, 2010, Jun:22(4):233-6.
  5. J Law, Medicine & Ethics, 2012.
  6. 2012. Jational Practitioner Data Bank, 2012, Tables 1-6
  7. CMS-1390-P, 2008, Average Unreimubrsed RSI Procedural Cost Reported by CMS, updated to reflect 2013 dollars
  8. 51_URFOs_10_17_13_FINAL.pdf