More than half of US hospitals use cost-to-charge ratios as a primary cost estimation method since true procedural cost accounting can be too expensive.
According to the infographic, the average overestimation in contribution per case is $1,200, multiplied by the average annual cases per 300-bed hospital: 1,000. The average contribution per case is the difference between total payments received minus total variable cost per case for the top 10 DRGs that account for 78 percent of total variable costs in orthopedic surgery.
The infographic shows 85 percent of hospitals overestimate the profitability for this service line, and 15 percent of hospitals underestimating.
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