Financial impact of breast reconstruction on an academic surgical practice

The financial reimbursement for breast reconstruction is perceived to be low. The authors evaluated the financial impact of providing breast reconstruction for an academic medical practice and health care system.

The authors examined the billing records for 97 patients undergoing postmastectomy breast reconstruction in 2006 at the University of Michigan. Professional net revenue was calculated by applying actual collection rates to procedural charges. Facility revenue was calculated by applying actual collection rates to charges from inpatient care and the operating room.

The payer mix was 70.1 percent private insurance, 22.7 percent health maintenance organization, 3.1 percent Medicare, 2.1 percent Medicaid, and 2.0 percent uninsured. The professional revenue and costs allocated to breast reconstruction were $242,078 and $177,411, respectively [net profit of $64,667 (27 percent)]. Health system facility revenue and costs were $1,109,678 and $943,892, respectively [net profit of $165,786 (15 percent)]. Physician reimbursement by surgical time was highest for delayed tissue expander placement ($1977.70/hour in the operating room) and lowest for immediate transverse rectus abdominis myocutaneous (TRAM) flaps ($327/hour in the operating room). The facility received the greatest average direct margin on TRAM flaps ($3471) and lost money on latissimus dorsi flaps (-$398 margin).

Postmastectomy breast reconstruction at this academic medical center is fiscally advantageous for both the surgical department and the health care system. However, reimbursement varies dramatically by type and timing of reconstructive procedure. Although immediate postmastectomy reconstructions with TRAM flaps provide superior aesthetic results with the greatest amount of patient satisfaction, poor physician reimbursement for these labor-intensive procedures may limit the ability of surgeons to provide these services because of poor financial return.