Is Robotic Surgery Cheaper?

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Stanford surgery professor Catherine Mohr tends to look at things her own way. In a recent TED talk about building green, she presented hard numbers to dispel some hype. In the following guest post, Mohr works through the economics of her own speciality: robotic surgery. Granted, she has a horse in this race: Mohr is also director of medical research at Intuitive Surgical, which produces surgical robots.

Is Robotic Surgery Cheaper?
By Catherine Mohr

There has been quite a bit of attention paid recently to medical technology and the high costs of high-tech medicine, but does high-tech really mean higher cost? The example of the Da Vinci surgical robot shows that sometimes spending money can actually save money.

In 2000, a new medical technology was introduced: the surgical robot. In that first year, only about 1,000 surgeries were done worldwide with these robots, and those surgeries cost a lot. When you total up the cost of all the instruments and supplies, the robots themselves, and training and service contracts for keeping those robots running, the average additional cost for using the Da Vinci was almost $11,500 for each surgery performed. Hardly a recipe for enthusiastic adoption. But it was gradually adopted – driven both by novelty and the promise of the early clinical results, which seemed to indicate that the minimally invasive surgery the robot enabled made for better patient outcomes with fewer complications.

Fast forward to 2009, and there are large numbers of academic papers attesting to the superior outcomes delivered by the Da Vinci. There were 1,200 systems worldwide in 2009, and more than 200,000 robotic surgeries were performed, including prostatectomies, gynecologic surgery, cardiac surgery and transoral ENT procedures. A startling 75% of the radical prostatectomies performed in the U.S. in 2009 were done with the Da Vinci – an unprecedented rate of adoption of a new technique in the traditionally conservative discipline of surgery. Several hospitals have even bought multiple systems, and Intuitive Surgical, the maker of these robots (and where I’m employed!), has grown from a little Silicon Valley startup into a billion-dollar company.

Are improved patient outcomes enough to explain how disruptive a force robotic technology has been in the surgical market when it seemed to come with such a price premium? Unlikely. Although patients were going home earlier, experiencing considerably less post-operative pain, and going back to work within two weeks rather than more than six weeks after surgery, these societal costs (while extremely important to the patient!) are not costs that the insurance company or hospital sees. So while they strongly drive the patient’s desire for robotic surgery, they don’t give the hospital any additional incentive to provide it. But, as expected, the answer to the mystery of the hospital’s incentive can be found in the economics of how paying more for technology in one part of patient care may result in lower overall costs for treating the patient’s condition.

One of the forces at work for improved economics was simply volume. With greater utilization of the robots in the field, the average per-procedure cost dropped considerably to just under $4,000 for instruments and robot amortization and maintenance. Still, when compared to $900 per-procedure cost for laparoscopic surgery, or $700 per-procedure cost for open surgical procedures, the residual $3.000 premium per procedure seems like a hard barrier to overcome. Especially since hospitals are typically paid a single fixed price for a given procedure. This total price varies by who the payer is, but in general, the more efficient the hospital is at keeping its costs down, the more money it makes. So why are they paying for the robots?

It turns out that, in order to understand why hospitals are so eager to develop their robotic programs, you have to look at the effect that transitioning to minimally invasive surgery has on the total cost of the hospitalization for that patient for that procedure. Keeping a post-surgical patient who had an uncomplicated surgery in a bed in a hospital while they recover from that surgery costs that hospital $1,500 per day on average; patients who have MIS surgery go home two-and-a-half days earlier on average than patients having the same surgery through an open incision. The savings from being able to discharge patients earlier not only wipes out the premium cost for the robot instruments and maintenance, but actually brings the hospital out about $500 per procedure ahead.

The second big savings comes from complications and transfusions. Complications — when the surgery does not go as planned and the patient is injured during the surgery — can be devastating for the patient, and extremely expensive for the hospital; a minor complication can wipe out the hospital’s entire profit on a surgery, and a major complication can cost the hospital almost three times what it will be reimbursed. As hospitals eat the costs of those complications, there is a strong financial incentive to avoid complications (in addition to the pure humanitarian one). By making minimally invasive surgery easier for the surgeon to perform well, robotic surgery has been consistently shown to have lower complication rates than either open or laparoscopic surgery (even when taking into account the learning curve during which surgeons are learning this new technology). For every surgery performed robotically instead of either open or laparoscopically, this effect translates into an additional $700 savings on average for the hospital in avoided complications and associated blood transfusions.

So a $1,200 per-surgery net cost savings for the hospital even when it is spending an extra $3,000 in the OR can explain much of the adoption. The freakonomics are simple.


Lystraeus

@Henry Lahore, post #8

Is this the same vitamin that cures AIDS?

I looked up a random lead (vitamin D effects in pregnancy) and although the wiki site references many studies on lack of vit D causing complications in pregnancy, it says nowhere that vit D supplements are an effective treatment.

Indeed, a 2009 systematic review found that there was not enough good quality research to decide if vit D is ineffective or not.

We should be careful in assuming that because lack of X is seen in Y, more of X lessens Y.

E.g. Wheeler 2010:

http://www.vitamindwiki.com/tiki-index.php?page=70%25+of+pregnant+women+had+complications+due+to+lack+of+vit+D+-May+2010

Review, Mahomed & Gülmezoglu 2009:

http://www.mrw.interscience.wiley.com/cochrane/clsysrev/articles/CD000228/frame.html

Robin H

- Turnip Truck Rider

Did these laparoscopic surgeons have that conversation with their patients when they were doing their first laparoscopic surgery? "I'm going to try something new on you and it's likely to take much longer if I take my time to be extra careful". Of course they didn't. How often do you think ANY new surgeon has that conversation with their patient or any surgeon doing a new variation of a procedure for that matter? Probably only when asked, although more patients know to ask now.

Robotic surgery outcomes are most often compared to OPEN surgery outcomes because open surgeries are still the norm for many of the procedures they are targeting. They are primarily talking market share from open procedures. Laparoscopy has been around for quite a while and has obviously failed to do this so far.

Another point not specific to your post. Last time I checked market share had an economic impact. Several of the comments made here ignore that gaining market share benefits the hospital economically although not in a way that shows up on a procedure by procedure cost accounting. Also the comments have focused on doctor preference and ignored that many hospitals are not just getting the robot to keep up with the Joneses but because patients are actively seeking out the hospitals that have them and hospitals without them are losing patients to those that do. Last time I checked this is how market forces are supposed to work.

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Efficiency is the name

I would think it obvious that it is easier for a surgeon to access organs during open surgeries. After all the surgeon must cut open a patient like the grand canyon. As the Davinic system uses only a few holes it is obvious MIS surgery uisng DaVinci will be better for the patient. If it costs $2000 per day for a hospital bed and only $500 per hour for a surgeon, the surgeon can spend four more hours during surgery on a patient if the MIS operation eliminates a day in the hospital. If the hospital stay is reduced by two or more days, the MIS procedure is even more efficient.

Don't overlook surgeon fatigue and how many procedures he/she can perform in a day. During open procedures, the surgeon may have to stand for hours at a time. The surgeon sits down at a console with the Davinic system. During open procedures, the surgeon may need to use optical lenses hanging from his head. The Davinci system provides a 3d stereoscope to look through that can provide magnification. The point - even though an MIS procedure may take longer, surgeon fatigue may be less so that the same number of procedures may be performed in a day.

While a Davinic system is expensive, the overall benefit in efficiency can pay for the system over time.

Of course if you have a choice as a patient to undergo open surgery or alternatively MIS surgery with the Davinci system, which would you choose?
Which would the insurance company choose? Which would a surgeon choose if he had to undergo surgery?

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Marketing gimmick

Intuitive is doing a real good job in marketing. They are convincing patients, clinic administrators and low-skilled surgeons that robotic surgery is superior to traditional open surgery.

When compared to laparoscopic surgery it is very different: robotic surgery can take longer, requires a trained OR team, the surgeon needs to go through a new learning curve and above all, it is extremely expensive!!!

If DaVinci surgery is so superior, one might wonder why, after thousands of procedures worldwide, there is no strong scientific evidence demonstrating that the technique has actually better outcomes than MIS surgery?

Finally, patient satisfaction is not higher (they actually have one or two more holes) not to speak about the potential risks associated to the technique. I am not saying that there is never a benefit with the robot (for a few very particular indications), but using the robot for example for benign GYN conditions is insane (but highly profitable for Intuitive and clinics don't have the choice since they are desperately trying to amortize their investment).

We are just helping them to spread their technique around the world and to strengthen their monopolistic position.

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Bradley

I have to disagree with somewhat to comments by "Jackson" above, and here is why:
I, too, am a surgery director of a 30 bed O.R. We "thought" we had no need for a robotics program. We already had a successful neurosurgery suite and open heart center, so we were the last healthcare facility in the region to provide robotics, and we wish we would have done it sooner. We started it a year ago and we have profited very well from it. It's all in how you look at it. We are now in the process of adding 10 more O.R. rooms. The reason being is because since we added the daVinci Robotics program, we have had double the number of highly trained surgeons apply to perform procedures at our hospital, and only about 25% of those were for robotics. Great surgeons want to work at hospitals with the newest technology, and robotics is no exception. We are now in the process of purchasing 2 additional daVinci robots for our new cardiovascular center for our heart surgeons to use. I do see your point, and yes, I agree to a point as well, that is, if only focusing on a per case basis, but overall, our NET gain just in the past 12 months have been over 2 million dollars, and in this day and time, that is pretty substantial and we have not regretted it in the least. We currently have a 5 month waiting list for our robot, and we are performing 3-4 procedures per day.

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Bradley

Also these comments by "Marketing Gimmick" are hogwash. I respect anyone's opinion, but those are clearly not fact based.

And just for the record, Intuitive does not make any more money for one case over another, regardless of length of time or whatever. All instruments are the same price regardless of what state you live in, what hospital you work in....whatever....there isn't another company out there that has pricing this consistent.

Patient satisfaction is ALWAYS much higher with it. We are talking a 23 hour hospital stay on average versus a 3-4 day hospital stay and usually back to work in a week versus 4-5 weeks. Blood loss with robotics is minimal, less than 100cc on average versus up to 1000cc or more depending on the procedure for laparoscopic or open procedures increasing the risks for further complications.

As far as longer surgeon times, we were fortunate, the 8 surgeons we started with already had at least 100 surgeries performed with robotics prior to our first case.

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