Cost and value of office‐based facial plastic and reconstructive surgery procedures

Abstract

Introduction

This chapter will provide an overview of factors affecting the cost of office‐based procedures in Facial Plastics and Reconstructive Surgery (FPRS), and will discuss the value of office‐based interventions.

Material and Methods

An in‐depth literature review was conducted using multiple primary and secondary sources. Literature from multiple disciplines was included in the review, including otolaryngology, anesthesiology, surgery, public health, and economics.

Discussion/Conclusions

A wide variety of procedures can be performed in an FPRS office. Large upfront costs to the office include laser, electrocautery and surgical equipment. These investments will yield an initial negative cost margin until sufficient case volume is achieved. It is often in the best interest of the patient to perform a procedure in‐office and avoid the facility and anesthesia fees associated with a surgical center or hospital. Costs and reimbursements vary greatly across regions and facilities. Additionally, overall cost depends on payer mix, procedures performed, and productivity of the practice. The scarcity of literature on this topic as it applies specifically to FPRS indicates that further research is needed to elucidate the value of common facial plastics procedures in an office‐based setting.

INTRODUCTION

In recent years, office‐based procedures have increased in popularity across multiple procedural specialties for a variety of both provider‐driven and patient‐driven factors. Within the field of Facial Plastic and Reconstructive Surgery (FPRS), office‐based procedures are of particular interest. As many FPRS procedures are aesthetic in nature and not covered by insurance, patients often seek cost‐effective options such as avoiding facility fees and anesthesia costs associated with an operating room (OR) utilization. Performing procedures in an office‐based setting may be in the best interest of the surgeon for a variety of reasons including greater efficiency, marketing to patients, ease of scheduling, and more direct control of overhead costs. This chapter will consider the value of office‐based procedures, both for the provider and for the patient.

COMMON PROCEDURES AND PRICING

There is currently a paucity of literature on cost analysis of FPRS‐specific procedures. However, relevant literature is published in Plastic Surgery, Oral Surgery, and Otolaryngology. These sources indicate that in recent years, the costs of commonly coded procedures are rising while third‐party payer reimbursement lags behind. ¹ , ² , ³ When compared with reconstructive procedures covered by insurance, office‐based aesthetic procedures may provide greater revenue, since the physician or practice is able to set the price. The Medicare Physician Fee Schedule (MPFS) was queried for common FPRS procedures, with results listed in the table below. Note that nonfacility charges are higher than facility charges for a given procedure to account for the overhead associated with performing the procedure in an office. Patients should expect to receive additional facility charges in their bill for procedures performed in a facility (i.e., hospital, surgery center) (Table 1).

Table 1.

Medicare physician fee schedule pricing information for common FPRS procedures.

HCPCS code	Description	Nonfacility price	Facility price	Nonfacility limiting charge	Facility limiting charge
15828‐15829	Rhytidectomy (cosmetic)	$0.00	$0.00	$0.00	$0.00
15876‐15879	Suction‐assisted lipectomy, head and neck	$0.00	$0.00	$0.00	$0.00
17380	Hair removal by electrolysis	$0.00	$0.00	$0.00	$0.00
17340	Cryotherapy for acne	$53.29	$49.83	$58.22	$54.44
17360	Chemical exfoliation	$124.24	$92.05	$135.73	$100.57
15777	Implantation of biologic implant (e.g., acellular dermal matrix) for soft tissue reinforcement	$219.40	$219.40	$239.70	$239.70
30120	Excision or surgical planing of skin of nose for rhinophyma	$524.28	$429.81	$572.78	$469.57
15781	Dermabrasion, segmental, face	$555.78	$436.73	$607.18	$477.13
69300	Otoplasty	$671.01	$478.26	$733.08	$522.50
21120	Genioplasty, augmentation	$687.63	$524.63	$751.23	$573.16
14040	Adjacent tissue transfer or rearrangement; defect 10 sq cm or less	$773.10	$629.49	$844.61	$687.71
30400	Rhinoplasty, primary: lateral and alar cartilages and/or elevation of nasal tip	NA	$1,288.04	NA	$1,407.19

Note: Of note, this information is for the National Payer Amount; geographic variations in RVUs would be accounted for by using a specific locality code.

Abbreviations: facility price: Fee schedule amount when a procedure is performed in a facility setting (i.e., hospital, ambulatory surgical center); FPRS, facial plastics and reconstructive surgery; nonfacility price, fee schedule amount when a procedure is performed in a nonfacility setting (i.e., office); limiting charge, maximum amount that a nonparticipating provider can charge a beneficiary for a given service.

OR OFFICE?: ECONOMIC CONSIDERATIONS

The cost difference between performing a procedure in the office and the OR can be significant. A recent study on genioplasty compared costs to the patient when the procedure was performed in the office under IV sedation versus an ambulatory surgical center under general anesthesia. This study found that the cost to the patient was doubled when the procedure was performed in a surgical center. ⁴ The added costs include anesthesia fees, additional supplies and medications, facility fees, and charges for recovery room time.

Previous studies on surgical cost/benefit analysis apply macroeconomic concepts to divide costs within three categories: variable direct, fixed direct, and fixed indirect. ³ , ⁵ Fixed indirect costs are those required to keep the office functioning and are not affected by the number of procedures performed. These costs include housekeeping, insurance, rent, heating, and air conditioning. Fixed direct costs require a minimum baseline investment, but will vary according to procedure volume. Variable direct costs for a given procedure are dependent on the specific procedure performed. These costs includes supplies, medications, and implants needed for a procedure. “Overhead” is defined as the ongoing operating cost of running a business (or practice) and includes both fixed direct and fixed indirect costs. ³ , ⁵

Surgery is an industry in which overhead costs are relatively high, and therefore a more accurate measure of profitability of a given case is its contribution margin. For a given case, the contribution margin is the total revenue minus the variable direct cost. ³ , ⁵ When applying this concept to surgery, it is important to consider the contribution margin per minute, given the large variability in length of procedures. ⁵ , ⁶ Recent studies have cited the average cost of OR time ranging from $29 to $80 per minute, with variation depending on cost breakdown, case complexity, payer mix, geographic region, and type of hospital (general vs. specialty, teaching vs. nonteaching). ⁶ , ⁷ Most recently, a 2018 large‐scale study by Childers et al. evaluated financial reports of hundreds of California hospitals and found the average cost of OR time to be $36–$37 per minute, with direct costs accounting for $20–$21 per minute. ⁷

Staff wages and benefits account for most of the direct costs of OR time. Childers et al. determined that salaries accounted for greater than two‐thirds ($13–$14) of direct costs per minute ($20–$21). ⁷ A fully functioning hospital OR requires not only OR staff, but also administrators and technicians. As an example, consider a facial scar revision performed in an OR. At a minimum, hospital protocols generally require one or two anesthesia staff, a circulating nurse, and a scrub technician in the OR. Indirectly, OR managers and administration will be involved in the case. The same procedure can be performed in the office. A nurse, trainee, or advanced practice provider may assist the surgeon with the procedure while also acting as scrub technician and/or circulator. Office‐based procedures can be scheduled through the office manager and/or scheduler, thus avoiding the need for additional administrative staff required to run an OR. This reduction in the number of staff involved with a procedure can have a large impact on procedural costs.

Despite the range in cited costs of OR time, the literature supports the finding that approximately half of this cost is attributable to indirect hospital costs (i.e. housekeeping, parking, security, maintenance, etc.), which are typically outside the control of the provider or their department. ⁶ , ⁷ , ⁸ Hospital consolidation has led to an overall increase in facility fees, including those for affiliated outpatient office spaces. ⁹ Independent providers may be able to provide more competitive rates for their patients by exercising greater control over these additional variables.

ANESTHETIC CONSIDERATIONS

Recent studies have indicated that several surgical procedures traditionally performed under general anesthesia can be performed under local anesthesia or sedation for cost‐containment purposes, often decreasing costs by up to 50%–66% or more. ¹⁰ , ¹¹ , ¹² , ¹³ , ¹⁴ , ¹⁵ , ¹⁶ , ¹⁷ , ¹⁸ Eliminating general anesthesia can have large impacts on cost reduction, both for reduction in number of staff needed to complete a procedure, and elimination of equipment and medication costs. ¹⁷ Childers et al. calculate the cost of general anesthesia as approximately $3.42 a minute. ⁷ A Google search reveals that the cost of regional or general anesthesia without insurance can range from $500 to $3500 in out‐of‐pocket costs to the patient, depending on length and complexity of the procedure. ¹⁹

As the face is particularly amenable to local and regional anesthesia, many aesthetic and reconstructive procedures can be performed without general anesthesia. Depending on the physician's level of comfort, a wide variety of FPRS procedures can be performed in an office under sedation with only local anesthesia. Oral surgeons receive formalized training in administering IV sedation and typically employ these techniques in their offices without the need for ancillary anesthetic staff. With supplemental sedation training, a facial plastic surgeon could implement this model in their office, essentially obfuscating the need for an OR and anesthesia staff. Financial incentives for the patient and provider should be weighed against potential risks of performing a procedure without general anesthesia. Further, patient selection is paramount, especially when more invasive procedures are considered. The patient should ideally be ASA Class I, able to communicate and follow instructions, and have a clear understanding of the potential for anxiety or discomfort during the procedure.

EQUIPMENT COSTS

The effective use of reusable surgical instruments can be a significant means of cost reduction. Recent studies have cited the sterilization costs at $0.51–$0.77 per instrument. ²⁰ , ²¹ With regard to prepackaged surgical instrument trays for the OR, otolaryngologists often use 20% or less of the instruments opened. ²² A recent quality improvement study reduced rhinoplasty trays to include only commonly utilized instruments; this intervention alone yielded a cost savings of $61.71 per rhinoplasty procedure. ²³ In an office‐based setting, careful selection of individual surgical instruments for a procedure, rather than using a standardized OR surgical tray, can reduce re‐sterilization costs.

Disposable OR supplies are typically nonbillable and thus, the practice is responsible for this cost burden. These supplies cost an average of $2.50–$3.50 per minute; this includes sutures, gloves, drapes, and other disposables. ⁷ , ⁸ , ²⁴ Reducing the usage of disposable supplies can aid in cost containment for office‐based procedures.

With this economic framework in mind, procedures with shorter operative time and lower variable costs are more profitable for the practice, and patients are less likely to incur additional charges. Laser procedures (both reconstructive and aesthetic) are examples of a highly profitable office‐based procedure. An initial investment is required to purchase laser equipment, but this overhead can be offset by the high number of procedures that can be performed with minimal additional variable costs per procedure. In a highly efficient practice, a provider can perform several brief laser procedures a day with minimal additional equipment required, thus reducing variable costs. Furthermore, disposable supplies and ancillary staff are typically not needed for the procedure. Other procedures that were found to be profitable include scar revision and simple facial trauma procedures (i.e., closed reduction of fracture). ⁵ These procedures require initial overhead for electrocautery machine, surgical instruments, and sterilization devices; however, the long lifespan of this equipment would make it a worthy investment for a practice with even a moderate volume of procedures.

Any procedure that is more resource intensive (e.g., a procedure involving an implant) would have a higher variable direct cost and potentially lower profitability if the provider is not able to set the cost. Plastic Surgery literature indicates that implant expense is often not reimbursed by third‐party payer and the cost is instead covered by the facility itself. ⁴ , ⁵ When a patient undergoes an implant procedure in a facility, the implant charge would typically be reflected in the facility fee. In the office setting, the patient may incur the expense of an implant as part of an office facility charge or as a separate cost entirely. For the patient, implant costs may be lower in a large hospital system or ambulatory surgical center with a high volume of cases and the ability to purchase implants in bulk. That said, a study comparing genioplasty in an office setting versus in a surgical center still determined that the cost to the patient was double when performed in a surgical center. ⁴ The added costs include anesthesia fees, additional supplies and medications, and facility fees including recovery room time. Equipment charges are a small factor in overall cost compared to staffing and facility fees.

REGIONAL VARIATIONS IN HEALTHCARE COSTS

According to data from the Centers for Medicare and Medicaid Services, there are large regional variations in healthcare costs. In 2020, per capita personal healthcare spending was highest in New England ($12,728; 25% higher than the national average). This was closely followed by the Mideast region ($12,577; 23% higher than the national average). The lowest rates of personal healthcare spending were found in the Rocky Mountain region ($8497, 17% lower than the national average) and Southwest ($8587; 16% lower than the national average). ²⁵ Although factors such as population demographics factor into these values, differences can also be attributed to variations in overall cost of living, which will affect the cost of labor and supplies in a given region. Regional differences in cost are factored into the MPFS for a given procedure, with differences in RVUs depending on locality.

CONCLUSION

Depending on surgeon training and comfort level, a wide variety of procedures can be performed in a FPRS office. Large upfront costs to the office include laser, electrocautery and surgical equipment. These investments will yield an initial negative cost margin until sufficient case volume is achieved.

When considering cost to patients, assuming there are no medical contraindications, it is often in the best interest of the patient to perform a procedure in‐office to avoid facility and anesthesia fees associated with a surgical center or hospital. An independent practice can avoid facility fees and may be able to offer more competitive, transparent prices to patients. Patient safety should, of course, always take precedence over financial motivations.

It is important to note that costs and reimbursements vary greatly across regions and facilities. Additionally, overall cost depends on payer mix, procedures performed, and productivity of the practice.

The scarcity of literature on this topic as it applies specifically to FPRS indicates that further research is needed to elucidate the cost versus benefit of common facial plastics procedures in an office‐based setting.

AUTHOR CONTRIBUTIONS

Both authors equally contributed to the conceptualization of this manuscipt. Dr. Hamberis contributed to the writing and Dr. Gray contributed to the editing of the final manuscript.

CONFLICT OF INTEREST STATEMENT

The authors declare no conflict of interest.

ETHICS STATEMENT

The authors have nothing to report.

Hamberis A, Gray ML. Cost and value of office‐based facial plastic and reconstructive surgery procedures. World J Otorhinolaryngol Head Neck Surg. 2023;9:257‐261. 10.1002/wjo2.107

DATA AVAILABILITY STATEMENT

Data sharing is not applicable to this article as no new data were created or analyzed in this study.