We’ve all read the statistics. The United States spends $5.3 trillion per year on healthcare, roughly 18% of GDP (1). Looking back at the last 10 years, the growth rate in annualized healthcare expenditure exceeds GDP growth and inflation rate (Table 1). Approximately 31% of the total healthcare expense goes toward hospital care, the leading category; this is followed by physician and clinic costs at approximately 20% of total expense (2). Even a high school economics student could look at the table below and understand that over the long term, the growth in National Healthcare Expenditure is not sustainable.
| Year | NHE growth rate | Real GDP growth | Inflation rate (CPI) |
| 2015 | 4.7-5% | 2.95% | 0.1% |
| 2016 | 4.8-5% | 1.82% | 1.3% |
| 2017 | 4.2-4.6% | 2.46% | 2.1% |
| 2018 | 4.6% | 2.97% | 2.4% |
| 2019 | 4.6% | 2.58% | 1.8% |
| 2020 | 10.5% | -2.16% | 1.2% |
| 2021 | 4.1% | 6.06% | 4.7% |
| 2022 | 4.8% | 2.51% | 8.0% |
| 2023 | 7.4-7.5% | 2.89% | 4.1% |
| 2024 | 7.2% | 2.79% | 2.9% |
Table 1. Annualized growth rate in National Healthcare Expenditure (NHE), US gross domestic product (GDP) and inflation (by consumer price index, CPI).
We can spend days having conversations about the root cause of rising healthcare costs, possible solutions, necessary changes and new coverage models. While some ideas might be more palatable or more effective than others, I would argue that no one really has a solution. In my opinion, a good first step would be to bring back physician administrators, or at the very least, ramp up physician engagement in hospital and system decision-making.
Over the 10 years that I’ve been at my current institution, I’ve watched six- or seven-figure equipment purchases take place without anyone from the C-suite ever having a conversation with the people who will actually use the devices. In too many instances, I felt my eyes rolling as I thought to myself, “If you had only asked, I could have helped you spend less money providing the same or better quality and making the staff experience better.” Healthcare administrators are rarely — if ever — traveling to specialty conferences, visiting trade shows or talking to industry leaders, and they are certainly not reading the latest evidence-based literature. No one knows how to better deliver efficient, high-quality care than the providers on the front line.
Physicians working in private practice are undoubtedly the leaders in understanding how to run a cost-effective practice because it directly impacts their bottom line, often making the difference between keeping the practice open or closing their doors. On the contrary, in an employed or hospital-affiliated setting, I’ve witnessed surgeons ask for robots, carbon fiber pedicle screws, 3D-printed custom interbody cages and outrageously expensive amounts of bone graft substitutes leading to tens or hundreds of thousands of dollars in additional expense. While I can appreciate that frustrations with the system can lead to a mentality of “it’s not my money, it’s the hospital’s” or a “stick it to the man” thought process, we have to avoid falling into that mindset.
Circuitously, it is your money. Over the past 20 years, orthopedic surgeons have watched as reimbursement has declined by 38% after adjustment for inflation (3). I can only begin to imagine what other specialties have experienced. When private and public insurers see data showing that 31% of healthcare spending goes toward hospital care and 20% toward physicians and clinics, we can bet that hospital care won’t be the sector with the largest target on its back. Rebuilding our leverage in the system should begin with establishing our value as cost-conscious physicians and developing an understanding of how to continue to deliver the quality of care we’ve been trained to provide in a more effective manner. Unfortunately, we’re often shielded from the expenses tied to intraoperative radiology equipment, implants, bone grafts, etc., which can make it challenging to understand where the opportunities for savings exist.
My own institution began sharing operative expense reports the day after surgery. Everything from the cost of an artificial disc replacement device, the cost of biologics, the price of FloSeal, down to the price of gauze is listed. If your hospital doesn’t provide you with this data, ask for it. You might be surprised by what you learn. Add to this the fact that many of the newest EMR systems also allow users to gather episode-specific data. This information can be used to compare the average cost per surgical case between yourself and your partners. The next step is being honest with yourself in regard to the products, devices and techniques you use. Do you truly need the large pack of BMP (bone morphogenetic protein) when a small will suffice? Do you need patient-specific implants when someone has otherwise normal morphology? Thoughtful evaluation of your own practice is guaranteed to yield substantial savings. The same mentality should be applied to your clinic. How many exam rooms do you need each day? What type and how many support staff are necessary for optimal efficiency?
In the eyes of hospital leadership, volume/productivity isn’t the only metric that matters when they examine the value a surgeon provides to the system. What truly matters is the operating margin, or better yet, the ability to generate profits for the system. Physicians and hospitals alike have very little control over the reimbursement received for a given episode of care aside from maximizing the complexity and co-morbidities associated with a given DRG (diagnosis-related group) payment. What we have some control over is how much is spent during that same episode.
Once you’ve identified key areas for cost savings, approach hospital leadership with a proposal that clearly illustrates the financial advantages gained by adopting straightforward changes to your practice. In industry consultant surveys, nearly three-fourths of physicians express interest in being involved in larger organization decisions but well less than half report that their input is incorporated. To effectively bridge the gap between healthcare provider and health system administrators, your focus needs to shift towards terms that will pique administration’s interest in your initiatives, such as cost savings, improved efficiency, increased value, enhanced productivity and greater profitability. By framing the narrative in a way that better appeals to hospital leadership, you are more likely to achieve your desired outcome.
Hospital system leadership should take note of the fact that the data quite convincingly endorses physician engagement as a valid means of reducing cost and improving value (4-6). While direct financial benefit may be hindered by anti-kickback and Stark regulations, there are countless indirect benefits to working collaboratively with hospital leadership: aligned decision-making, consistency across sites, improved efficiency, investment in technology, enhanced physician recruitment and retention, increased productivity and physician satisfaction.
While $5.3 trillion in annual healthcare spending makes it seem like there is an endless pot of gold, the fact is that there is a finite amount of money that can be spent on healthcare in this country. Perhaps we just haven’t reached that limit yet. At times, you might feel like a replaceable cog in the health system’s wheel. And in the mind of some individuals, you are.
Understanding what you bring to the table and how your value translates to a profit and loss statement is an important piece of information when it comes to establishing leverage during the negotiation process. Rest assured that your hospital is collecting expense data about you and your practice. They know exactly who the high cost providers are and which providers are most profitable. Your best bet is to track the same data and make proactive changes that improve your standing. Otherwise, the hospital or the healthcare system will eventually force those changes for you and when they do, your input is likely to be ignored.
Nolan M. Wessell, MD, MBA, is an orthopedic spine surgeon, an assistant professor and well-being co-director in the Department of Orthopedic Surgery, Division of Spine Surgery, at the University of Colorado School of Medicine.
REFERENCES
1. National Health Care Spending Increased 7.2 Percent In 2024 As Utilization Remained Elevated. Micah Hartman, Anne B. Martin, David Lassman, Aaron Catlin, and The National Health Expenditure Accounts Team. Health Affairs 2026 45:2, 110-120 10.1377/hlthaff.2025.01683
2. Amin, K., Cox, C., Ortaliza, J. & Wager, E., Health Care Costs and Affordability. In Altman, Drew (Editor), Health Policy 101, (KFF, October 2025) https://www.kff.org/health-costs/health-policy-101-health-care-costs-and-affordability/?entry=table-of-contents-introduction (Date Accessed: June 17, 2026).
3. Pereira DE, Hannon CP, Courtney PM, Rana AJ, Frisch NB. Trends in Orthopaedic Surgeon Compensation: A Comparative Analysis Over Twenty Years. J Arthroplasty. 2025 Jul;40(7):1660-1666. doi: 10.1016/j.arth.2025.02.012. Epub 2025 Feb 17. PMID: 39971206.
4. Obremskey WT, Dail T, Jahangir AA. Value-based purchasing of medical devices. Clin Orthop Relat Res. 2012 Apr;470(4):1054-64. doi: 10.1007/s11999-011-2147-9. PMID: 22033872; PMCID: PMC3293958.
5. Vilendrer S, Amano A, Asch SM, Brown-Johnson C, Lu AC, Maggio P. Engaging Frontline Physicians in Value Improvement: A Qualitative Evaluation of Physician-Directed Reinvestment. J Healthc Leadersh. 2022 Apr 8;14:31-45. doi: 10.2147/JHL.S335763. PMID: 35422669; PMCID: PMC9005236.
6. Olson SA, Obremskey WT, Bozic KJ. Healthcare technology: physician collaboration in reducing the surgical cost. Clin Orthop Relat Res. 2013 Jun;471(6):1854-64. doi: 10.1007/s11999-013-2828-7. PMID: 23404417; PMCID: PMC3706644.
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