Surgeon-Driven Variation in the Cost of Hip Arthroscopic Surgery for Labral Tears: A Time-Driven Activity-Based Costing Analysis

Abstract

Background: Amid mounting pressure to reduce health care spending, strategies for identifying and eliminating unwarranted variation in costs have garnered significant attention. Previous studies have characterized intersurgeon variation in costs for common orthopaedic procedures, but such variation remains unexplored in the context of hip arthroscopic surgery. Purpose: To (1) characterize variation in the cost of hip arthroscopic surgery between surgeons using time-driven activity-based costing (TDABC) and (2) identify patient characteristics, intraoperative findings, and operative procedures underlying such intersurgeon variation in costs. Study Design: Cohort study; Level of evidence, 3. Methods: Employing TDABC, the authors determined the intraoperative cost of 890 outpatient hip arthroscopic surgery cases performed by 5 surgeons at 4 surgery centers from 2015 to 2022. All costs were calculated in United States dollars. Costs were normalized to protect the confidentiality of internal hospital cost data. Surgeon-specific mean costs were calculated with and without adjustment for patient characteristics, surgical personnel, operative factors, and surgery center. Finally, to elucidate the sources of surgeon-driven cost variation, the authors estimated the proportion of variation attributable to different cost subcategories, including labor, implant/allograft, and other supply costs. Results: The intraoperative cost per patient ranged from 38.2 to 212.8 normalized cost units (mean, 100.0 ± 26.5), with a 1.6-fold variation in the mean cost between the highest and lowest cost surgeons. Operating surgeon alone explained 53.4% of the observed variation in costs. Controlling for case-specific features significantly improved the explanatory power to 91.8% ( P < .001), but the adjusted variation in costs between surgeons remained essentially unchanged (decreased by <3%). Each of the 5 surgeons generated costs that deviated significantly from those predicted based on case-specific factors, with mean surgeon deviations ranging from −5.0% to 21.8% ( P < .001 for all). Drivers of cost variation differed substantially between surgeons but generally stemmed from labor or other supply costs rather than implant/allograft costs. Conclusion: The cost of outpatient hip arthroscopic surgery varied widely between surgeons; the cause of this deviation was multifactorial and surgeon specific. While within-surgeon cost variation was effectively explained by patient and operative characteristics, most between-surgeon variability remained unexplained by observable factors. These insights may support individual surgeons in cost reduction efforts and, more importantly, may enable the alignment of reimbursement rates with costs.