PURPOSE:
To demonstrate the relative financial value and profitability of providing the service of free tissue transfer for head and neck reconstruction from the surgeons’ and hospital’s perspective.
METHODS:
Medical and hospital accounting records of 58 consecutive patients undergoing head and neck resections and simultaneous free flap reconstruction were reviewed. Software from the Center for Medicare and Medicaid Services was used to calculate anticipated Medicare payments to the surgeon based on Current Procedural Terminology codes and to the hospital based on diagnosis related group (DRG) codes.
RESULTS:
The mean actual payment to the surgeon for a free flap was .60. This payment was 91.6% (/) of the calculated payment if all payments had been reimbursed by Medicare. Total charges and total payment to the hospital for the 58 patients were respectively ,148,852 and ,765,552. After covering direct costs, total hospital revenue (i.e., profit) was ,056,886. DRG 482 was the most commonly assigned DRG code (n=35). According to the DRG fee schedule, if Medicare had been the insurance plan for these 35 patients, the mean payment to the hospital would have been ,840. The actual mean hospital payment was ,133. This actual hospital payment represents 96% of the calculated Medicare hospital payment (,133/ ,840).
CONCLUSION:
Free flap reconstruction of the head and neck is extremely profitable for the hospital. For their mutual benefit hospitals should join with physicians in contract negotiations of physician reimbursement with insurance companies. Bolstered reimbursement figures would better attract and retain skilled surgeons dedicated to microvascular reconstruction.