Retrospective cohort study comparing surgical inpatient charges, total costs, and variable costs as hospital cost savings measures

We analyzed differences (charges, total, and variable costs) in estimating cost savings of quality improvement projects using reduction of serious/life-threatening complications (Clavien-Dindo Level IV) and insurance type (Private, Medicare, and Medicaid/Uninsured) to evaluate the cost measures. Multiple measures are used to analyze hospital costs and compare cost outcomes across health systems with differing patient compositions. We used National Surgical Quality Improvement Program inpatient (2013-2019) with charge and cost data in a hospital serving diverse socioeconomic status patients. Simulation was used to estimate variable costs and total costs at 3 proportions of fixed costs (FC). Cases (Private 1517; Medicare 1224; Medicaid/Uninsured 3648) with patient mean age 52.3 years (Standard Deviation = 14.7) and 47.3% male. Medicare (adjusted odds ratio = 1.55, 95% confidence interval = 1.16-2.09, P = .003) and Medicaid/Uninsured (adjusted odds ratio = 1.41, 95% confidence interval = 1.10-1.82, P = .008) had higher odds of complications versus Private. Medicaid/Uninsured had higher relative charges versus Private, while Medicaid/Uninsured and Medicare had higher relative variable and total costs versus Private. Targeting a 15% reduction in serious complications for robust patients undergoing moderate-stress procedures estimated variable cost savings of $286,392. Total cost saving estimates progressively increased with increasing proportions of FC; $443,943 (35% FC), $577,495 (50% FC), and $1184,403 (75% FC). In conclusion, charges did not identify increased costs for Medicare versus Private patients. Complications were associated with > 200% change in costs. Surgical hospitalizations for Medicare and Medicaid/Uninsured patients cost more than Private patients. Variable costs should be used to avoid overestimating potential cost savings of quality improvement interventions, as total costs include fixed costs that are difficult to change in the short term.