Multivariable Cost Frontiers-Qualitative Financial Analyses Using Operational Metrics From the Implementation of a...

We expand the application of cost frontiers and introduce a novel approach using qualitative multivariable financial analyses.

With the creation of a 5 + 2-year fellowship program in July 2016, the Division of Vascular Surgery at the University of Vermont Medical Center altered the underlying operational structure of its inpatient services.

Using WiseOR (Palo Alto, CA), a web-based OR management data system, we extracted the operating room metrics before and after August 1, 2016 service for each 4-week period spanning from September 2015 to July 2017. The cost per minute modeled after Childers et al's inpatient OR cost guidelines was multiplied by the after-hours utilization to determine variable cost. Zones with corresponding cutoffs were used to graphically represent cost efficiency trends.

Caseload/FTE for attending surgeons increased from 11.54 cases per month to 13.02 cases per month ( P = 0.0771). Monthly variable costs/FTE increased from $540.2 to $1873 ( P = 0.0138). Monthly revenue/FTE increased from $61,505 to $70,277 ( P = 0.2639). Adjusted monthly reve-nue/FTE increased from $60,965 to $68,403 ( P = 0.3374). Average monthly percent of adjusted revenue/FTE lost to variable costs increased from 0.85% to 2.77% ( P = 0.0078). Adjusted monthly revenue/case/FTE remained the same from $5309 to $5319 ( P = 0.9889).

In summary, we demonstrate that multivariable cost (or performance) frontiers can track a net increase in profitability associated with fellowship implementation despite diminishing returns at higher caseloads.