Surgonomics and cost containment.

The implementation of Diagnostic Related Groups (DRGs) and ALL PAYOR SYSTEMS will force surgeons to examine the consumption of hospital resources. Previous study results at our institution indicated that almost 90 per cent of common surgical DRGs would be unprofitable under the Prospective Payment System (PPS). This study was done to examine the financial components of a common surgical DRG that would be unprofitable, examine appropriateness of hospital expenditures and propose strategies for cost containment without sacrificing quality of care. We studied all patients (215) in DRG 162 (inguinal and femoral hernia procedures, ages 18 to 69 years, without a complicating condition) at the Long Island Jewish-Hillside Medical Center from 1 January 1983 until 31 December 1983. Hospital charges were examined by hospital service category and aggregated by total dollars per category, patient mean dollars plus or minus standard error of mean per category and patient totals. Total hospital charges for this DRG were $493,432.00, DRG reimbursement (1983 Federal Register) would have been $447,799.00, resulting in a net loss (deficit) to the hospital of $47,434.00 or $212.00 per patient. Hospital services (room and board, laboratory and ancillaries) were overused in the treatment of this DRG. Strategies involving quite modest decreases in length of stay and use of ancillary services (laboratory, x-ray, electrocardiogram) would save at least $60,000.00 and make this a profitable DRG.