TABLE 3-2Sources of Variation in the Cost of Surgery for Each Phase of the Surgical Episode

Examples of Practice Style- Related Excess CostsPhases of Surgical Episodes and Payment TypesExamples of Quality- Related Excess Costs
Excessive rates of discretionary proceduresInitial decision making (decision to operate)Unnecessary surgery
Unnecessary consultations, testing or imaging (higher unbundled payments)Perioperative period (preoperative testing, procedure, and immediate postoperative care)
  • Hospital (diagnosis-related group or outlier payments)
  • Physician services
Complications resulting in “bumping” of diagnosis-related group level or outlier status
Excessive cost shifting (from inpatient stay to ancillary services)Transition period (medical services after initial discharge)
  • Hospital (inpatient and outpatient)
  • Physician services
  • Extended care

    Home health

    Rehabilitation stay

Steady state
  • Baseline medical costs
Complications resulting in more hospital, physician, and ancillary services after discharge

From: 3, Approaches to Assessing Value—Illustrative Examples

Cover of Value in Health Care
Value in Health Care: Accounting for Cost, Quality, Safety, Outcomes, and Innovation.
Institute of Medicine (US) Roundtable on Value & Science-Driven Health Care; Yong PL, Olsen LA, McGinnis JM, editors.
Washington (DC): National Academies Press (US); 2010.
Copyright © 2010, National Academy of Sciences.

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