Value Denominator: The Fundamentals of Costing for Orthopaedic Surgeons

In any discipline, improving quality and efficiency of services acts as a unifying goal. In health care, the goal of achieving high-value care is the new doctrine for all individual entities: payors, providers, and patients. Value is defined as the ratio of outcomes to costs incurred. Therefore, a strong understanding and interpretation of cost measures is crucial to accurately deriving health care value. Health care costing is not simply limited to the costs of implants or the procedure but the costs required to deliver treatment throughout the episode of care. Consequently, physicians serve a keystone role toward driving change in health care costs and initiate high-value care practices. However, physicians require a better understanding of health care costs and institutional accounting practices. To this effort, it is critical that health care providers begin to close the knowledge gap around health care costing and provide leadership when advocating for high-value patient care. This review is purposed to provide a basic review of fundamental components for health care economics, deciphering health care costing, and preview current strategies that prioritize high-value patient care.