Mayo Clinic Proceedings Home
MCP Digital Health Home

Hospital Charges for Urologic Surgery Episodes of Care Are Rising Despite Declining Costs



      To investigate the temporal relationship of hospital charges relative to recorded costs for surgical episodes of care.

      Patients and Methods

      This retrospective cohort study selected individuals who underwent any of 8 index urologic surgical procedures at 392 unique institutions from January 1, 2005, through December 31, 2015. For each surgical encounter, cost and charge data reported by hospitals were extracted and adjusted to 2016 US dollars. Trend analysis and multivariable logistic regression modeling were used to assess outcomes. The primary outcome was trend in median charge and cost. Secondary outcomes consisted of hospital characteristics associated with membership in the highest quartile of institutional charge-to-cost ratio.


      Cohort-level median cost per encounter trended down from $6824 in 2005 to $5586 in 2015 (P for trend<.001), and charges increased from $20,210 to $25,773 during the same period (P for trend<.001). Hospitals in the highest quartile of institutional charge-to-cost ratio were more likely to be safety net, nonteaching, urban, lower surgical volume, smaller, and located outside the Midwest (P<.001 for each characteristic).


      The pricing trends shown herein could indicate some success in cost-containment for surgical episodes of care, although higher hospital charges may be increasingly used to bolster reimbursement from third-party payers and to compensate for escalating costs in other areas.

      Abbreviations and Acronyms:

      CCR (charge-to-cost ratio), CMS (Centers for Medicare and Medicaid Services), TDABC (time-driven activity-based costing)
      To read this article in full you will need to make a payment

      Purchase one-time access:

      Academic & Personal: 24 hour online accessCorporate R&D Professionals: 24 hour online access
      One-time access price info
      • For academic or personal research use, select 'Academic and Personal'
      • For corporate R&D use, select 'Corporate R&D Professionals'


      Subscribe to Mayo Clinic Proceedings
      Already a print subscriber? Claim online access
      Already an online subscriber? Sign in
      Institutional Access: Sign in to ScienceDirect


        • Fuse Brown E.C.
        Irrational hospital pricing.
        Houston J Health Law Policy. 2014; 14: 11
        • Reinhardt U.E.
        The pricing of U.S. hospital services: chaos behind a veil of secrecy.
        Health Aff (Millwood). 2006; 25: 57-69
        • Bai G.
        • Anderson G.F.
        Extreme markup: the fifty US hospitals with the highest charge-to-cost ratios.
        Health Aff (Millwood). 2015; 34: 922-928
        • American Hospital Association
        Hospital Statistics.
        American Hospital Association, Chicago, IL2013
        • Tompkins C.P.
        • Altman S.H.
        • Eilat E.
        The precarious pricing system for hospital services.
        Health Aff (Millwood). 2006; 25: 45-56
        • Porter M.E.
        • Teisberg E.O.
        Redefining competition in health care.
        Harv Bus Rev. 2004; 82 (136): 64-76
        • Reinhardt U.E.
        Health care price transparency and economic theory.
        JAMA. 2014; 312: 1642-1643
        • Porter M.E.
        • Lee T.H.
        The strategy that will fix health care.
        Harv Bus Rev. 2013; 91: 24-25
        • Bai G.
        • Anderson G.F.
        Variation in the ratio of physician charges to Medicare payments by specialty and region.
        JAMA. 2017; 317: 315-318
        • McClintock T.R.
        • Mossanen M.
        • Shah M.A.
        • Wang Y.
        • Chung B.I.
        • Chang S.L.
        Charge-to-cost ratio varies among common urologic surgery procedures.
        Urol Pract. 2018; 5: 349-350
        • Schneeweiss S.
        • Seeger J.D.
        • Landon J.
        • Walker A.M.
        Aprotinin during coronary-artery bypass grafting and risk of death.
        N Engl J Med. 2008; 358: 771-783
        • Leow J.J.
        • Chang S.L.
        • Meyer C.P.
        • et al.
        Robot-assisted versus open radical prostatectomy: a contemporary analysis of an all-payer discharge database.
        Eur Urol. 2016; 70: 837-845
        • Lindenauer P.K.
        • Pekow P.
        • Wang K.
        • Mamidi D.K.
        • Gutierrez B.
        • Benjamin E.M.
        Perioperative beta-blocker therapy and mortality after major noncardiac surgery.
        N Engl J Med. 2005; 353: 349-361
        • Wright J.D.
        • Ananth C.V.
        • Lewin S.N.
        • et al.
        Robotically assisted vs laparoscopic hysterectomy among women with benign gynecologic disease.
        JAMA. 2013; 309: 689-698
        • Jeong I.G.
        • Khandwala Y.S.
        • Kim J.H.
        • et al.
        Association of robotic-assisted vs laparoscopic radical nephrectomy with perioperative outcomes and health care costs, 2003 to 2015.
        JAMA. 2017; 318: 1561-1568
        • Hanchate A.D.
        • McCormick D.
        • Lasser K.E.
        • Feng C.
        • Manze M.G.
        • Kressin N.R.
        Impact of Massachusetts health reform on inpatient care use: was the safety-net experience different than in the non-safety-net?.
        Health Serv Res. 2017; 52: 1647-1666
        • Werner R.M.
        • Goldman L.E.
        • Dudley R.A.
        Comparison of change in quality of care between safety-net and non–safety-net hospitals.
        JAMA. 2008; 299: 2180-2187
        • Ku L.
        • Jones E.
        • Shin P.
        • Byrne F.R.
        • Long S.K.
        Safety-net providers after health care reform: lessons from Massachusetts.
        Arch Intern Med. 2011; 171: 1379-1384
        • Cutler D.M.
        • Scott Morton F.
        Hospitals, market share, and consolidation.
        JAMA. 2013; 310: 1964-1970
        • Robinson J.
        Hospitals respond to Medicare payment shortfalls by both shifting costs and cutting them, based on market concentration.
        Health Aff (Millwood). 2011; 30: 1265-1271
        • Ginsburg P.B.
        Can hospitals and physicians shift the effects of cuts in Medicare reimbursement to private payers?.
        Health Aff (Millwood). 2003; (Suppl Web Exclusives:W3-472-W3-479)
        • Frakt A.B.
        How much do hospitals cost shift? a review of the evidence.
        Milbank Q. 2011; 89: 90-130
        • Park J.D.
        • Kim E.
        • Werner R.M.
        Inpatient hospital charge variability of U.S. hospitals.
        J Gen Intern Med. 2015; 30: 1627-1632
        • Dafny L.
        • Duggan M.
        • Ramanarayanan S.
        Paying a premium on your premium? consolidation in the US health insurance industry.
        Am Econ Rev. 2012; 102: 1161-1185
        • Kaplan R.S.
        • Witkowski M.L.
        Better accounting transforms health care delivery.
        Accounting Horizons. 2014; 28: 365-383
        • Cutler D.
        • Dafny L.
        Designing transparency systems for medical care prices.
        N Engl J Med. 2011; 364: 894-895
        • US Centers for Medicare & Medicaid Services
        CMS proposes changes to empower patients and reduce administrative burden [press release].
        (Published April 24, 2018. Accessed May 24, 2018)
        • Goodman J.C.
        What is consumer-directed health care?.
        Health Aff (Millwood). 2006; 25: w540-w543
        • Anderson G.F.
        From ‘soak the rich’ to ‘soak the poor’: recent trends in hospital pricing.
        Health Aff (Millwood). 2007; 26: 780-789
        • Murray R.
        Setting hospital rates to control costs and boost quality: the Maryland experience.
        Health Aff (Millwood). 2009; 28: 1395-1405
        • Akhavan S.
        • Ward L.
        • Bozic K.J.
        Time-driven activity-based costing more accurately reflects costs in arthroplasty surgery.
        Clin Orthop Relat Res. 2016; 474: 8-15
        • Donovan C.J.
        • Hopkins M.
        • Kimmel B.M.
        • Koberna S.
        • Montie C.A.
        How Cleveland Clinic used TDABC to improve value.
        Healthc Financ Manage. 2014; 68: 84-88
        • Yu Y.R.
        • Abbas P.I.
        • Smith C.M.
        • et al.
        Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomy.
        J Pediatr Surg. 2016; 51: 1962-1966
        • French K.E.
        • Albright H.W.
        • Frenzel J.C.
        • et al.
        Measuring the value of process improvement initiatives in a preoperative assessment center using time-driven activity-based costing.
        Healthc (Amst). 2013; 1: 136-142
        • Kaplan R.S.
        • Anderson S.R.
        Time-driven activity-based costing.
        Harv Bus Rev. 2004; 82 (150): 131-138
        • McLaughlin N.
        • Burke M.A.
        • Setlur N.P.
        • et al.
        Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.
        Neurosurg Focus. 2014; 37: E3
        • Tseng P.
        • Kaplan R.S.
        • Richman B.D.
        • Shah M.A.
        • Schulman K.A.
        Administrative costs associated with physician billing and insurance-related activities at an academic health care system.
        JAMA. 2018; 319: 691-697
        • Najjar P.A.
        • Strickland M.
        • Kaplan R.S.
        Time-driven activity-based costing for surgical episodes.
        JAMA Surg. 2017; 152: 96-97
        • Jha A.K.
        • Orav E.J.
        • Dobson A.
        • Book R.A.
        • Epstein A.M.
        Measuring efficiency: the association of hospital costs and quality of care.
        Health Aff (Millwood). 2009; 28: 897-906
        • Yasaitis L.
        • Fisher E.S.
        • Skinner J.S.
        • Chandra A.
        Hospital quality and intensity of spending: is there an association?.
        Health Aff (Millwood). 2009; 28: w566-w572
        • Chen L.M.
        • Jha A.K.
        • Guterman S.
        • Ridgway A.B.
        • Orav E.J.
        • Epstein A.M.
        Hospital cost of care, quality of care, and readmission rates: penny wise and pound foolish?.
        Arch Intern Med. 2010; 170: 340-346
        • Bai G.
        • Anderson G.F.
        A more detailed understanding of factors associated with hospital profitability.
        Health Aff (Millwood). 2016; 35: 889-897
        • Moody's Investors Service
        Not-for-profit and Public Healthcare – US: Medians - Operating Pressures Persist as Growth in Expenses Exceeds Revenue.
        Moody's Investors Service, New York, NY2018
        • Ginsburg P.B.
        • Patel K.K.
        Physician payment reform: progress to date.
        N Engl J Med. 2017; 377: 285-292

      Linked Article

      • Rising Health Care Charges: A Red Herring in a Value-Based Health Care World?
        Mayo Clinic ProceedingsVol. 94Issue 6
        • Preview
          In this issue of Mayo Clinic Proceedings, through an analysis of urologic surgical episodes of care across 392 hospitals, McClintock et al1 found that although cost per hospital episode of care decreased 20% from 2005 to 2015, the charges for these episodes of care increased more than 25% during this same period. Hospitals with the highest charge to cost ratios were more likely to be safety net, nonteaching, urban, lower surgical volume, smaller, and located outside the Midwest. The methods used in this study meet the traditional criteria for internal validity.
        • Full-Text
        • PDF