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ECONOMICS, EDUCATION, AND HEALTH SYSTEMS RESEARCH

Sampling Error Can Significantly Affect Measured Hospital Financial Performance of Surgeons and Resulting Operating Room Time Allocations

Franklin Dexter, MD, PhD^*, David A. Lubarsky, MD, MBA, and John T. Blake, PhD

*Division of Management Consulting, Department of Anesthesia, University of Iowa, Iowa City; Department of Anesthesiology, University of Miami, Coral Gables, Florida; and Department of Industrial Engineering, Dalhousie University, Halifax, Nova Scotia

Address correspondence and reprint requests to Franklin Dexter, Division of Management Consulting, Department of Anesthesia, University of Iowa, Iowa City, IA 52242. Address e-mail to Franklin-Dexter{at}UIowa.edu

Hospitals with limited operating room (OR) hours, those with intensive care unit or ward beds that are always full, or those that have no incremental revenue for many patients need to choose which surgeons get the resources. Although such decisions are based on internal financial reports, whether the reports are statistically valid is not known. Random error may affect surgeons’ measured financial performance and, thus, what cases the anesthesiologists get to do and which patients get to receive care. We tested whether one fiscal year of surgeon-specific financial data is sufficient for accurate financial accounting. We obtained accounting data for all outpatient or same-day-admit surgery cases during one fiscal year at an academic medical center. Linear programming was used to find the mix of surgeons’ OR time allocations that would maximize the contribution margin or minimize variable costs. Confidence intervals were calculated on these end points by using Fieller’s theorem and Monte-Carlo simulation. The 95% confidence intervals for increases in contribution margins or reductions in variable costs were 4.3% to 10.8% and 6.0% to 8.9%, respectively. As many as 22% of surgeons would have had OR time reduced because of sampling error. We recommend that physicians ask for and OR managers get confidence intervals of end points of financial analyses when making decisions based on them.

IMPLICATIONS: The common approach of using one fiscal year of perioperative accounting data can be insufficient to prevent random error from influencing important management decisions. When accounting data are used for hospital and operating room management decision making, confidence intervals should be calculated for the key financial variables (e.g., variable cost per hour of operating room time).

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