Key points

In the 1950s and 1960s, as growing access to medical care led to concerns about increasing costs, research focus turned to the results of interventions. This new attention toward the end effects of treatment was dubbed the “outcomes movement” and was labeled the “third revolution in health care” by then-editor of the New England Journal of Medicine , Arnold Relman. Outcomes research strives to understand the results of interventions. These results are any patient experiences, including mortality, complications (or lack thereof), function, or quality of life, and can be reported by the provider, the patient, or by a third party. As the movement spread, reporting of outcomes became almost cursory. The increased prominence of outcomes led to what some call the fourth revolution in health care, namely, evidence-based medicine. Evidence-based medicine seeks to analyze and compare the outcomes, benefits, and risks of medical treatments, drugs, and devices to guide decision making by health care providers, consumers, and payers. This is hoped to reduce rapidly growing health care spending thought to be caused, partially, by the lack of evidence for the effectiveness of many costly, innovative treatments. Lack of evidence is not limited to new innovations, however; 85% of common medical treatments have not been rigorously validated.

In today’s health care marketplace, economic outcomes are increasingly becoming part of the assessment of medical interventions. Economic outcomes are indeed outcomes because they are a result of a care encounter, although they are not typically considered as such. The rate at which new surgical techniques are introduced in plastic surgery makes the field especially conducive to the analysis of economic outcomes. However, a systematic review of plastic surgery outcomes research from 1998 to 2004 found that only 3% of studies reported economic outcomes. Possible reasons for this include unfamiliarity of plastic surgery investigators with economic outcomes and that, for some procedures, costs are borne by patients. To maintain a position of impact on health care policy, plastic surgeons need to include economic outcomes in their research whenever feasible. The aim of this paper is to inform plastic surgeon investigators on the basics of economic outcomes and provide examples of their use in the plastic surgery literature.

What are economic outcomes?

The most simple economic outcome is cost—the actual value of the resources consumed or depleted while providing a service. Costs can be divided into several categories. Direct costs are generally the items one first thinks of when considering costs: Supplies, medication, and personnel. Fixed direct costs are those that remain the same regardless of the number of times the service is provided. These items, such as facilities, administrative costs, and durable equipment, cost roughly the same amount to own irrespective of frequency of use. Variable costs, likewise, are reliant on the number of times a service is provided. For instance, labor is largely dependent on the availability of work. Combined with direct costs are indirect costs. These costs are more difficult to quantify and include items such as lost wages owing to time off of work or decreased work ability. Even more difficult, or nearly impossible, to calculate are intangible costs, a monetary representation of non-financial outcomes such as pain, suffering, and even negative effects on relationships. The final item in the calculation of total costs is opportunity costs. These costs represent the lost value when resources cannot be used in another manner. For instance, if an operating room is being used for a procedure that brings a hospital little income, it cannot be used for a more lucrative procedure. This may be less of an issue for plastic surgery, because the specialty’s hypothetical opportunity costs are low when compared with other surgical specialties. To obtain a complete picture of costs, it is important to include all of these elements.

Costs are not the only economic outcome. Charges may also be the outcome of interest. Charges are how much is billed for a service, which may not reflect the actual cost. Reimbursement, the amount received in exchange for a service, can be used as an outcome as well. In general, charges are higher than costs, owing to inclusion of profit and protection against uncompensated costs. Reimbursements vary from $0 to the full amount charged and may be set by a third party, as in the case of Center for Medicare and Medicaid Services (CMS) reimbursement rates. The tenuous relationship between these 3 economic outcome measures means that they are not interchangeable ( Fig. 1 ). It is important to know which one is being used when a study is assessed. Likewise, when performing a study it is equally important to specify which outcome is being used.

The relationship between costs, charges, and reimbursements.

Whose perspective?

When using traditional outcomes measures, it is easy for all parties to come to a consensus on what constitutes a good outcome. Patients, providers, and third-party payers can all agree that reduced pain is positive. However, matters of finances are less clear. Whereas patients may experience better aesthetic outcomes after a more expensive intervention, if the provider is not recouping costs, it is not universally favorable. Therefore, it is important for researchers to be explicit about who is benefitting from the intervention under investigation. This is important information for readers of published studies because only studies performed from the same perspective can be compared.

The perspective taken depends on the research question being asked; there is no standard “best” perspective. Owing to the public nature of CMS reimbursement rates, assessing outcomes from a CMS perspective is relatively simple. Because other third-party payers base reimbursement rates on CMS rates, these figures can be extrapolated to third-party payers as a whole. With many plastic surgeons operating private practices, examining economic outcomes from the provider perspective can be enlightening, including specific outcomes, such as revenue (the amount earned) or profit (the amount earned after operating costs are subtracted). In the last decade, however, there has been a shift toward patient-rated outcomes; thus, there has been an increased interest in the economic ramifications of interventions on patients. This is in line with movements to empower patients and encourage their active role in health care. The patient perspective can be difficult to generalize. For procedures that are covered by third-party payers, patient costs can be negligible, placing more emphasis on indirect costs such as travel costs or lost wages, which are highly variable. The patient perspective is also the most likely of all perspectives to include intangible costs, which are nearly impossible to quantify. The societal perspective takes into account everyone who is impacted by an intervention, including individuals who are generally not considered, such as tax payers or coworkers who must work extra hours to cover for an ill employee. However, including all of these viewpoints can be exceedingly difficult; to truly represent the perspective of society, members of the general public should provide values.

Ideally, all costs that result from an encounter should be tallied, including cost savings if an intervention avoids a more expensive outcome, as well as difficult to calculate indirect, intangible, and opportunity costs ; however, it is impossible to include every item. For this reason, economic analyses are often based on a variety of assumptions, including estimated costs. Costs can be varied over a range of values to determine the robustness of the estimates to draw conclusions despite difficulty calculating exact costs.