Cost analysis of laparoscopic gastric bypass practice using current Medicare reimbursement and practice costs

We performed a formal cost analysis of a hypothetical bariatric practice consisting of a surgeon, dietitian, clinical coordinator/office manager, receptionist, and certified medical assistant to determine whether a bariatric practice would have a difficult time surviving financially with the current Medicare reimbursement.

The number of possible cases was calculated for the 2005 calendar year. Most of the costs and assumptions were taken from an actual bariatric practice. The malpractice insurance premium (but not physician salary and benefits) was calculated into the practice cost.

With a total of 231 days available for clinical work in 2005, 300 scheduled laparoscopic gastric bypasses could have been performed to allow for appropriate clinic time for new patient visits, postoperative visits, and annual visits. The total reimbursement from Medicare would have been $516,158, with most of the reimbursement coming from procedure fees ($407,063). The total practice cost would have been $444,592. Most of the costs were clinic staff salary and benefits ($207,065) and the malpractice premium ($55,150). The net difference of $71,566 was left to pay the salary and benefits of the bariatric surgeon.

The low reimbursement of Medicare for laparoscopic gastric bypass threatens the financial viability of a bariatric surgery practice. With the increasing cost of malpractice and the threatened decrease in Medicare physician reimbursement, Medicare recipients could see a decrease in the number of bariatric surgeons offering them service.