Surgonomics: the cost dynamics of craniotomy

Prospective payment systems using the diagnostic related group (DRG) mechanism are being phased in for Medicare inpatient hospital care. The purpose of this study was to examine a common neurosurgical procedure (001), craniotomy without trauma, and characterize the cost dynamics of this DRG. All patients (n = 50) treated in this DRG at the Long Island Jewish Medical Center during 1983 had their financial charges exclusive of physician fees examined. The findings were: (a) each hospital service category had wide charge variances around the mean; (b) emergency (ER) admissions were 200% more expensive than nonemergency (non-ER) admissions; (c) ER admissions seemed to have no greater severity of illness than non-ER admissions, but had a significantly different referral pattern (i.e., admission from the ER to a nonneurosurgical service with a subsequent neurosurgical referral); (d) this DRG when grouped into clinical "subproducts" (i.e., craniotomy for tumor, hematoma, hydrocephalus, aneurysm, benign cyst, and other) showed marked charge differences; and (e) the most expensive 25% of patients had five times higher charges than the least expensive 25% for both ER and non-ER admissions. This type of financial analysis may give surgeons a methodology with which to address the problems of cost containment in a more serious manner.