Economies of scale, physician volume for urology patients, and DRG prospective hospital payment system

Diagnosis Related Group (DRG) hospital payment has begun to squeeze hospitals financially and is likely to do so in the future. This study analyzed the relationship between the volume of urologic procedures by an individual urologist, hospital costs per patient, and outcome. We used a three-year DRG database of urology patients (N = 2,980) at an academic medical center to analyze these. Low-volume urologists (arbitrarily defined by us) had higher hospital costs per patient, financial losses versus profits under DRGs, and a poorer outcome when compared with high-volume urologists. Pearson correlation showed a positive relationship between cost per patient and physician volume for nonemergency patients (-0.129, p less than 0.0001) and emergency patients (-0.368, p less than 0.0001). This may have been explained (in part) by a greater severity of illness for patients of low-volume urologists. These findings suggest, however, that the volume of urologic procedures per urologist may be related to hospital resource consumption. The health care financing environment of the future should provide substantial interest in this finding for those involved in the consumption of urologic services.