Is Wound Care Profitable for Academic Medical Centers?
J. Bradley Strawn, M.D., M.B.A., William Hoffman, M.D., David Young, M.D..
U.C.S.F., San Francisco, CA, USA.
PURPOSE: Acute and chronic wounds exact a large financial toll on patients and providers. With the advent of technologically advanced accounting systems we now have the ability to more accurately analyze these costs. This study is an analysis of the financial impact of wounds at a single academic medical center. This information reveals how payor and provider variables affect the financial bottom line, thus enabling Wound Care Services to make more enlightened decisions regarding provider services, payor mix, staff support, and use of resources.
METHODS: Cost accounting, financial, provider, and procedure data was obtained from Eclipsys, a decision support application that resides on a mainframe computer. Medical Center data was obtained for all inpatients during fiscal year 2008 with a wound diagnosis. Financial analysis was performed on 2,980 admissions using Microsoft Access and Excel. Information for analysis included billing charges, collections, insurance information, visit statistics, procedures performed, primary and secondary providers, and service at discharge.
RESULTS: Patients with wounds as primary or secondary diagnosis included 2,982 admissions, 36,676 hospital days, with an average 12.3 day length of stay. Charges totaled $536 million with only $142 million collected, resulting in a net loss after direct and indirect costs of -$4.5 million, or a loss of $1,511 per patient admission. Medicaid patients accounted for 21.3% of total cases, with an ALOS of 16.4 days and collection rate of 15.1%, resulting in a net loss of $17.4 million, or -$27,363 per patient. Commercially insured patients accounted for 32.9% of total cases, with an ALOS of 12.2 days and collection rate of 39.0%, resulting in a net profit of $21.1 million, or +$21,517 per patient.
When the primary diagnosis was wound related (n=917), patient admissions result in a net profit of $980, or a 4% contribution to the Medical Center. The majority (57%) of patients with wound as a primary diagnosis were admitted to Medicine (222, 24%), General Surgery (173, 19%) or Plastic Surgery (131, 14%). When costs are analyzed by service, General Surgery and Plastic Surgery contribute a net profit of $2,505 and $2,418 per patient, respectively, while Medicine has a net loss of $2,044 per patient.
CONCLUSION: When seen as a whole, patients with wound care needs are not profitable, as the hospital loses $1,511 per patient. Payor mix plays a large role; Medicaid patients use up more hospital bed days, yet collected revenues do not even cover direct costs, resulting in a net loss of $27,363 per patient. These patients become more profitable to the Medical Center if a “wound” is their primary diagnosis, when they have commercial insurance, and if they are managed by the General Surgery or Plastic Surgery Service.