Financial impact of hand surgery programs on academic medical centers.

Full Abstract

BACKGROUND:
This study analyzes the financial performance of hand surgery in the Department of Surgery at the University of Michigan. This analysis can serve as a reference for other medical centers in the financial evaluation of a hand surgery program.

METHODS:
Fiscal year 2004 billing records for all patients (n = 671) who underwent hand surgery procedures were examined. The financial data were separated into professional revenues and costs (relating to the hand surgery program in the Section of Plastic Surgery) and into facility revenues and costs (relating to the overall University of Michigan Health System). Professional net revenue was calculated by applying historical collection rates to procedural and clinic charges. Facility revenue was calculated by applying historical collection rates to the following charge categories:
inpatient/operating room, clinic facility, neurology/electromyography, radiology facilities, and occupational therapy. Total professional costs were calculated by adding direct costs and allocated overhead costs. Facility costs were obtained from the hospital's cost accounting system. Professional and facility incomes were calculated by subtracting costs from revenues.

RESULTS:
The net professional revenue and total costs were 1,069,836 and 1,027,421 dollars, respectively. Professional operating income was 42,415 dollars, or 3.96 percent of net professional revenue. Net facility revenue and total costs were 5,500,606 and 4,592,534 dollars, respectively. Facility operating income was 908,071 dollars, or 16.51 percent of net facility revenues.

CONCLUSIONS:
While contributing to the academic mission of the institution, hand surgery is financially rewarding for the Department of Surgery. In addition, hand surgery activity contributes substantially to the financial well-being of the academic medical center.

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Author information

Author/s: Hasan, Jafar S (JS); Chung, Kevin C (KC); Storey, Amy F (AF); Bolg, Mary L (ML); Taheri, Paul A (PA);

Affiliation: Section of Plastic Surgery, Surgery Finance Office, University of Michigan Medical School, Ann Arbor, Mich. 48109-0340, USA. jhasan(-atsign-)umich.edu

Journal and publication information

Publication Type: Journal Article; Research Support, Non-U.S. Gov't

Journal: Plastic and reconstructive surgery (Plast Reconstr Surg), published in United States. (Language: eng)

Reference: 2007-Feb; vol 119 (issue 2) : pp 627-35

Dates: Created 2007/01/18; Completed 2007/02/02;

PMID: 17230099, status: MEDLINE (last retrieval date: 12/26/2008)

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MeSH headings (categories)

This article was linked to the MESH Headings shown below.

Academic Medical Centers - economics
Ancillary Services, Hospital - economics
Costs and Cost Analysis
Financial Management, Hospital
Hand - surgery
Hospital Costs

Hospital Costs
Humans
Income
Michigan
Operating Rooms - economics
Surgery, Plastic - economics; education

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