The cost of shoulder arthroscopy: a comparison with national tariff

'Payment by results' was introduced with the aim of providing each trust with a transparent and fair remuneration for the work done. Hospitals are paid a tariff for each Healthcare Resource Group (HRG). The tariff is calculated at a national level, by means of a complex manipulation of historic financial data. However, the financial viability of a hospital relies on these payments and so accuracy is vital.

We conducted a cost analysis of shoulder arthroscopic procedures carried out at an elective orthopaedic unit. This unit is self contained and well audited, providing an unique opportunity to make a more accurate cost analysis. We calculated the cost of the facility, consumables/implants, anaesthetics and staff pay. This was then compared with the amount paid to the trust.

All arthroscopic operations performed at our institution attract a tariff of pound 1780. Our cost of a subacromial decompression was pound 1307, a profit of pound 473. A rotator cuff repair was pound 2672, a loss of pound 892.

The tariff is inaccurate. The arthroscopic HRG is too general and fails to address the extra time and expense of equipment some procedures utilise. We found cost was very sensitive to length of operation. Delays and even teaching can make a 'profitable operation' lose money for the trust.