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Editorial |
1 From the Department of Radiology (0641), Indiana University Hospital, 550 N University Blvd, Indianapolis, IN 46202-5253. Received June 15, 2001; accepted June 18. Address correspondence to the author (e-mail: mecohen@iupui.edu).
Index terms: Cost-effectiveness • Economics, medical • Editorials
We have a strong need for a better understanding of the economic effect of what we do in our day-to-day clinical practice. Health care expenditures are continuing to increase. The use of imaging resources is growing steadily, from about 36 procedures per year per 100 persons in 1964 to 130 in the 1990s (1).
Traditional businesses evaluate income and expenses and calculate final profit or operating margin. In contrast, hospital radiology departments focus heavily on cost because hospitals have difficulty in accurately determining the true income of radiology departments. Because there are great difficulties in allocating capitation income dollars for radiology services, radiology departments focus on cost per procedure and continually strive to decrease this cost. Paradoxically, although we have good information about the global cost per unit of procedure, or the relative-value units (RVUs), in most radiology departments, we have poor information about the cost of delivering a single item of service, such as a neck radiograph. Not only do we not understand the cost of individual radiologic procedures, we do not understand the drivers for these costs. In addition, for any particular procedure, we have little knowledge of how factors such as disease severity and patient cooperation vary the cost between patients.
The study by Blackmore et al (2), reported in this issue of Radiology, focuses on a part of the cost of imaging the cervical spine of patients with trauma, the technical or hospital cost. It does not evaluate professional or physician cost.
One method of cost control is to seek the optimal or most cost-effective imaging algorithms, and numerous researchers have taken this approach in evaluating imaging in suspected cervical spine injury. Blackmore et al (3) modeled cost-effectiveness of computed tomography (CT); patients were clinically stratified into three risk categories, and maximum benefits from CT were found in those with high and intermediate risk for injury. Katzberg et al (4) found that for the evaluation of acute cervical trauma, MR imaging is more accurate than radiography in the detection of a wide spectrum of neck injuries. Thomas et al (5) found that in patients with trauma, a major source of increased imaging costs was repeats of imaging studies performed at the referring hospital, even though almost all of the original radiologic images had been transferred with the patient to the receiving hospital. For example, the receiving hospital repeated 13 of the 30 head CT studies.
Imaging costs are also increased by the use of unnecessary imaging, often performed because of fear of litigation. Velmahos et al (6) reported that in a series of 549 alert nonintoxicated patients with no abnormal neck signs or symptoms, cervical spine radiography did not reveal injury in any patient; these investigators (6) thus believe that routine cervical spine images are not needed. The total cost for imaging in these patients was reported as $242,000, but there was no indication of how the costs were determined or whether they were the true costs or charges. These costs did not include professional fees.
In a somewhat similar study, McNamara et al (7) evaluated 286 alert nonintoxicated patients with blunt trauma who were thought to be at a high risk for cervical spine injury. Fractures or ligamentous disruptions were identified with radiography in five patients, all of whom had neck pain and/or tenderness. All imaging findings in 141 asymptomatic patients were negative, and the total cost of this unnecessary imaging was $33,000 for the 141 asymptomatic patients, by using charges as a surrogate for cost. The authors conclude that symptoms may serve as guide to whether imaging should be performed.
Taheri et al (8) evaluated the total cost of an entire trauma service and identified unexpected findings in the diagnosis-related groups payment system. For each patient, they evaluated the total cost of the trauma care, including direct and indirect costs. They compared the cost with reimbursement and found that for nonsurviving patients the profit margin was actually greater than that for survivors. The cost for the nonsurvivors was generally higher, but reimbursement was often much more generous.
Kaneriya et al (9) looked at the potential for decreasing the use of CT by obtaining additional oblique views when the standard three-radiograph view of the cervical spine was inadequate. In one patient group, CT was performed when the initial three views failed to reveal the entire cervical spine. In a second group, the standard three views were complemented with bilateral oblique views; CT was performed only if these five views failed to adequately depict the entire cervical spine. By using Medicare payments as a surrogate for cost, the total cost per patient for spine imaging was $92 when two oblique views were obtained, compared with $116 when these two views were not obtained. This difference is due to the much higher use of CT in the latter group of patients. The authors conclude that oblique views are cost-effective in the evaluation of cervical spine trauma (9).
In some centers, a routine lateral cervical spine radiograph is rapidly obtained in patients with possible cervical spine trauma. Spain et al (10) looked at the role of the radiograph obtained in the resuscitation area in 92 patients with cervical spine trauma and compared this radiograph with a full spine series following a patient’s resuscitation. In 36.5% of the patients, the entire cervical spine was not adequately depicted with the single portable lateral view. Spain et al (10) concluded that routinely obtaining a single lateral portable cervical radiograph wastes time and money, and they estimate the annual cost of the inadequate cervical spine studies at $31,000 but do not define cost or indicate how the costs were determined.
Managers of radiology departments may have poor knowledge of the true costs of delivery of radiologic services. The managers use traditional accounting methods to calculate their total labor and supply costs but not the cost of delivery of a service, such as obtaining a cervical spine radiograph.
It may be useful to briefly review the classification of costs. Costs may be divided into direct and indirect costs. Direct costs are those directly traceable to the performance of a radiologic study. They may be variable or fixed; variable costs vary with the type of procedure performed (eg, film or contrast used), while fixed costs do not change with the procedure (eg, depreciation, salaries). Indirect costs are those costs within the department or institution that are not directly related to the study, such as administrative personnel, heating, or building maintenance (11,12).
Activity-based cost (ABC) analysis has been widely used in industry to track costs. ABC analysis provides a means to more accurately understand the actual costs of delivering specific services, by incorporating and analyzing all of the direct and indirect costs of performing a procedure or service (13). The study by Blackmore et al (2) uses ABC analysis to look at the costs of providing cervical spine imaging to patients with trauma.
There have been a few other reports of the application of ABC in health care. Glick et al (14) used ABC microcosting to look at cervical spine imaging. Cohen et al (13) conducted a detailed ABC analysis of all components of a large academic radiology department. This article defines ABC and describes the methodology for performing these studies. Nisenbaum et al (15) used ABC to determine costs of CT in an academic radiology department and compare them with Medicare payments. Professional reimbursement was less than the professional cost for all 16 CPT, or Current Procedural Terminology, codes evaluated, and technical reimbursement from Medicare was below technical cost for two of the codes. For neck CT, technical reimbursement was $211, and the technical component cost was $169.47 (15).
In this issue, Blackmore et al (2) report that the cost of performing cervical spine imaging exceeds the Medicare reimbursement for all risk categories. The largest discrepancy was for high-risk patients (cost of imaging, $57.77; reimbursement, $31.22). Currently, payments for performing imaging studies are fixed; should insurance companies begin to stratify payments on the basis of the actual costs of providing the service? Stratification would require knowledge of severity of the patient’s injuries, complexity of the study, and the sophistication of the equipment. This question is pertinent in view of the current national debate regarding payment for mammography. Clearly, Blackmore et al and others are uncovering a disconnect between cost and payment, which urges the performance of more extensive cost analysis studies.
Unfortunately, the performance of accurate costing studies is fraught with difficulties. These difficulties include the following:
Specific items that are associated with the study by Blackmore et al that may be different than other studies include the following:
We can attempt to compare the results of this study with those of other studies. Saini et al (16) studied the technical costs of radiologic examinations in their department. For all general radiographic imaging, the technical costs per examination averaged $41.92 (published in 2000, based on 1995–1996 data). Unfortunately, while some direct measurements were made, many costs were determined by means of estimates and assignments, and no allocation was made for hospital overhead. This cost is lower than the $49.60 cost reported by Blackmore et al (2) for cervical spine imaging, which does include a component allocation for overhead; technologists’ wages were 34% of all of the direct costs. Ajani et al (17) looked at the cost of cervical spine imaging following trauma and reported the cost of standard cervical spine series as $93 per patient. The addition of flexion and extension views added $42. However, no methods for determining the cost were given, and no definition of cost was stated (17). This cost is much higher than that reported by Blackmore et al (2). Thus, there are huge discrepancies in the reported costs of performing imaging studies. These discrepancies must be acknowledged but are not surprising in view of the complexity of performing these analyses.
The value of the article by Blackmore et al (2) is that it adds to a small but growing volume of literature on the cost of delivering radiology services. It also shows that ABC analysis can be applied in a clinical environment and indicates the complexity and cost of performing true costing studies. A great strength of the article is that it is a determined effort to get real data and to avoid estimates. It also clearly uses costs and not charges as a surrogate for cost.
In conclusion, we need more articles like this one to provide additional information of the cost of the delivery of radiology services. While these studies are difficult to perform, they can and should be performed, heeding the maxim that "it is better to be approximately right than completely wrong."
FOOTNOTES
See also the article by Blackmore et al (pp 581–587 ) in this issue.
Abbreviation: ABC = activity-based cost
REFERENCES
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  W. W. Mayo-Smith, J. T. Rhea, W. J. Smith, C. M. Cobb, I. F. Gareen, and G. S. Dorfman Transportable versus Fixed Platform CT Scanners: Comparison of Costs Radiology, January 1, 2003; 226(1): 63 - 68. [Abstract] [Full Text] [PDF]
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