BACKGROUND: In our cost-conscious health care system hospitals are fin
ding that costs are as important as charges or reimbursements, especia
lly as hospitals compete for managed care contracts, We have prospecti
vely gathered cost data for more than 60 common operations performed a
t our institution over the last 3 years. METHODS: Over a 25-month peri
od, from January 1993 to February 1995, 30 pancreaticoduodenectonay pr
ocedures were performed for which cost data were available, Cases were
divided according to diagnosis (neoplastic or benign) and were evalua
ted for complications which prolonged length of slay (LOS). Costs were
analyzed by an item-by-item prospective micro-cost analysis technique
, Items were grouped into two areas: operating room (OR) costs and hos
pital (ward) costs, OR costs included disposable equipment, nondisposa
ble equipment, OR room, OR staff, postanesthesia care, and anesthesia
costs, Ward costs included hospital room, pharmacy, and radiology cost
s. RESULTS: OR costs for the 30 PD patients were similar and represent
ed approximately 21% of total hospital costs, Of the 30 patients, comp
lications resulting in a prolonged LOS occurred in 10 (33%): intra abd
ominal abscess in 3 (2 with pancreatic leaks), superficial marginal ul
ceration in 2, delayed return of gastrointestinal function in 2 (1 wit
h pulmonary edema) nd 1 each of bile leak, urosepsis, and chylous asci
tes, No cost differences were observed when comparing neoplasm versus
chronic pancreatitis for all parameters. When comparing patients who h
ad complications versus those who did not, however, there was a statis
tically significant cost difference for both hospital ward or total co
sts, Regardless of whether a PD was performed for neoplastic or benign
disease, postoperative complications increased hospital ward costs by
76% due Po increased LOS. CONCLUSIONS: This cast analysis study is an
example of the methodology that would allow surgeons to investigate a
ny common surgical procedure by first identifying areas of increased c
osts, This quantitative knowledge focuses the clinician on areas to im
prove quality which will then lower costs.