There has been increasing concern in the medical, business, and insura
nce communities and government agencies about the rising cost of healt
h care. Since 1980 the cost of medical care has increased from $280 bi
llion dollars per year to $670 billion dollars in 1990, and was estima
ted at $900 billion in 1993. Several factors have contributed to this
increase, including the high cost of hospitalization and new expensive
technology, such as laparoscopic cholecystectomy. This present cost a
nalysis was undertaken to determine the cost variables in laparoscopic
cholecystectomy to see if changes in physician, nursing, and administ
ration work activities could decrease the cost of hospitalization. Fif
ty-four patients who had an uncomplicated elective cholecystectomy dur
ing a five-month period in 1993 were assessed in terms of cost compone
nts of hospitalization, including nursing unit labor costs, surgery pe
rsonnel labor costs, supply/instrument cost, and ancillary costs. Nine
general surgeons participated in this study, four of whom accounted f
or 71% of the annual volume of cases. This analysis was performed with
the help of Baxter Corporate Consulting, a Division of Baxter Healthc
are Corporation. From this study, it was found that the average cost f
or uncomplicated laparoscopic cholecystectomy patients was $1589 +/- $
223. The operating room and supply/instrument component costs were the
two largest expenses, accounting for 42% of the total cost. Reimburse
ment from various insurance agencies were also evaluated, and it was d
etermined that a contract made with a local HMO caused the hospital to
lose an average of $443.00 per patient. Instrument cost was evaluated
, showing that the surgeons who used disposable instruments had an ave
rage instrument cost of $806 +/- $63 per case, whereas those using reu
sable products had an average cost of $303 per case. (A reprocessing c
ost of $200 was also added when reusable instruments were used. This i
ncluded the cost of cleaning, repairs, and labor costs for this equipm
ent.) The cost of disposable and reusable products was evaluated in te
rms of the initial purchase price, replacement charges, equipment main
tenance charges, and labor costs for cleaning, repackaging and inspect
ion, sterilization, and quality control. A second factor identified wa
s that patients directed to an inpatient nursing unit incurred an aver
age direct nursing labor cost of $124, whereas the cost was only $54 w
hen the patient went to an out-patient unit. A third observation demon
strated that the operating room time averaged 203 min +/- 31 min, and
the length of the operative procedure accounted for only 96 min +/- 20
min of the total operating room time. From this data it appears that,
in hospitals with more than 300 laparoscopic cholecystectomy cases pe
r year, the costs of using reusable and disposable instruments is simi
lar. Time/motion studies in the operating room have also been institut
ed, along with changes in postoperative physician orders, to decrease
the cost of the hospitalization.