The association between higher procedure volume and cost savings for total knee arthroplasty has been understudied. Our study filled this gap by examining the volume-cost association among TKA recipients in New York State, and found that TKAs performed by higher-volume orthopaedic surgeons at higher-volume hospitals tended to have lower costs than TKAs performed by lower-volume surgeons at lower-volume hospitals. The magnitude of cost savings associated with higher volume varied by years (2013–2016), and volume groups. For example, higher-volume surgeons seemed to be able to achieve cost savings only in medium- and high-volume hospitals.
Previous studies demonstrated that, for primary TKA, higher hospital surgical volume was associated with lower charges and Medicare payment [9, 19, 20]. However, charges are inflated dollar amounts that do not reflect the actual expenditures of the procedure. The charge-to-cost ratios of most hospitals ranged from 1.5 to 4.0, with the maximum of 12.6 [21]. Compared with previous studies, our analysis has several important strengths. First, we converted total charges to inpatient costs to better measure the true costs of primary TKA. Second, our choice of an all-payer administrative database allowed us to examine the volume-cost association in a more diverse adult population, not just Medicare beneficiaries in several previous studies. Third, we investigated the joint effects of both surgeon and hospital volume, and were able to control for the cumulative experience of surgeons.
Both surgeon volume and hospital volume demonstrated economies of scale in our sample. Surgeons with more operations may possess better surgical skills and have shorter operative time, leading to lower risk of complications and shorter length of stay of patients. Previous studies examined Medicare claims data and found shorter procedure duration for primary TKA as hospital and surgeon volume increased, which was associated with lower infection rate [22, 23]. Other studies reported a significant increase in LOS of TKAs performed by low-volume surgeons [24–27]. Furthermore, higher-volume institutions may have more efficient resource allocations and utilization through dedicated orthopedic operating room (OR) unit, and have more negotiating power with implant companies, both of which help to reduce input costs [28–30]. For example, the investment in a dedicated OR unit, in which staff commits only to surgical cases of one specialty, can be considered as fixed costs. Higher-volume hospitals can spread the costs over a larger volume of orthopedic surgeries, therefore realizing cost savings relative to other hospitals. It was estimated that highest-volume hospitals spent $2,600 less in labor in the operating room for total joint replacements and paid $1,500 less for knee implants compared with lower-volume hospitals [31]. Finally, the inverse volume-cost relationship was also observed in other procedures. For example, a study found persistent cost savings associated with high-volume surgeons for four different cancer resections [32]. Other studies found that higher-volume hospitals tended to perform gastric bypass surgery with lower costs [33].
A significant association between surgeon experience, measured by the time since they graduated from medical school, and lower costs was also identified. Given two orthopaedic surgeons who have performed the same number of TKAs in the past year, the surgeon with more practicing years is more likely to deliver less costly care. This phenomenon may be explained by the human capital theory in economics – surgeons accumulate a lifetime stock of human capital through learning, which improves their performance in operating room. Increasing surgeon experience, either measured by years since residency or after medical school, was associated with improved patient outcomes for alimentary tract and rectal cancer [34, 35]. It would be reasonable to assume that more experienced surgeons are also more efficient in resource utilization, as supported by the finding in this study. However, the accumulated human capital might depreciate if surgeons have temporal breaks in their practice, which in turn impairs their productivity [11]. Our volume measures capture the amount of practices in the past year, and the inverse volume-cost relationship after controlling for experiences since medical school graduation indicates the importance of maintained surgical practices in avoiding deterioration of orthopaedic surgeons’ human capital.
The costs of TKA increased from 2013 to 2016: even after adjusting for inflation, the median costs of TKA increased by 1.4% during this period (see Table A3 for median costs by calendar year). Despite the overall increased procedural costs, we found that higher-volume surgeons and higher-volume hospitals might have achieved more cost savings in more recent years, compared to their respective counterparts. Future research is needed to determine if this trend continues in more recent years and how the cost efficiencies achieved by high-volume providers may help slow down the overall increasing costs for TKA.
Our analysis has several potential limitations. First, the administrative data lack more granular information on clinical conditions and severity of disease that may influence inpatient costs. However, although the unmeasured confounding may bias our estimates of the inverse volume-cost association, it is unlikely that unmeasured patient characteristics would alter the direction of this association. In addition, when we examined differences in observed patient characteristics by provider volume, higher volume providers tended to have patients with a higher prevalence of obesity (see Table A1), a risk factor associated with complications and higher hospital cost [36]. Thus, if higher-volume hospitals and surgeons tended to have TKA patients with more comorbidities (measured or unmeasured) or disease severity, the unmeasured confounding would bias the inverse volume-cost associations towards null and our estimated associations represent conservative estimates of the true associations.
Another limitation of this study is potential measurement errors in inpatient costs. Because we only had information on total charges of inpatient stays and the cost to charge ratios (CCRs) at the hospital level, our cost estimates may not accurately reflect actual payments to orthopaedic surgeons [37]. Since CCRs are not payer-specific, we might have over-estimated the inpatient costs for private-pay patients and under-estimated the inpatient costs for Medicaid patients because Medicaid specific CCRs are typically higher than hospital-level average CCRs. Furthermore, our cost measures did not include costs incurred for services before or after the inpatient stay. Future studies should evaluate the costs associated with the entire episode of care. It’s important to note that our study doesn’t investigate factors that contribute to the cost savings of TKA by high-volume providers. Further studies should investigate individual training of surgeons, operation room management, and other institutional factors that may underline the volume-cost associations we found.
In conclusion, our study revealed lower costs of TKA performed by higher-volume surgeons at higher-volume hospitals in New York State. The findings suggest that selective referral of TKA to high-volume orthopaedic surgeons and hospitals would enhance the value of care to patients undergoing TKA.