December 17, 2019

Providing cost-benefit analysis for ERAS-related solutions

By: OR Manager

Enhanced Recovery After Surgery

The implementation of Enhanced Recovery After Surgery (ERAS) is based on the concept of organizing care around the patient, addressing medical condition needs to optimize readiness for surgery and reducing the likelihood of postoperative complications. Efficacy is measured by how well we perform according to these objectives and achieve an overall cost savings in the process.

At the beginning of this series, we introduced the importance of maximizing value, which is defined by Michael E. Porter and Thomas E. Lee, MD, as “achieving the best outcomes at the lowest cost.”1 They define the main problem faced by the US healthcare economy as a struggle with “rising cost and unsatisfactory quality” that cannot be resolved by “‘silver bullet’ approaches or incremental fixes.”1 In this article, the fourth in the series, we will explore how cost-benefit analysis can be used to identify and prioritize favorable fixes for the issues that lead to poor operative outcomes. Previous articles appeared in the October, November, and December 2019 issues of OR Manager.

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As we develop quality standards, we look at the cost of performing a preventive intervention weighed against the cost of the negative outcome we intend to avoid. Although the cost of specific preventive interventions and treatments can be quantified, it is important to also consider the indirect benefits that can be realized by both patients and healthcare provider organizations.

A simple benefit-to-cost ratio is the best way to determine whether your planned approach will appeal to hospital administration and generate the executive buy-in needed to move forward. Success for the organization is dependent on an overall decrease in cost of care in order to ensure the ability to continue to provide services to the community—an increasingly important consideration, as discussed in “The role of the OR in ERAS pathway implementation” (OR Manager, November 2019, 18-21).

Calculating a benefit-to-cost ratio

The benefit-to-cost ratio can be calculated in a few easy steps:

First, compile a list of all the potential costs and benefits associated with the quality standard being proposed. Costs of preventive intervention may include materials, labor expense, and facility expense. Benefits may include any cost associated with the negative outcome avoided or added revenue potential resulting from decreased length of stay, increased capacity, or earned incentives. It is important to also capture non-monetary benefits such as improved patient satisfaction, higher hospital rankings, and improved market position.

Next, assign a value to each item on the list. Intangible benefits can be assigned an approximated value for the purpose of the calculation. This value should be agreed upon by administration and used in a standard fashion in order to provide fair comparative analysis when weighing various opportunities against one another for prioritization.

The third step is to apply a simple mathematical equation, dividing the total sum of monetized benefits by the total sum of costs.

If the calculation results in a number greater than 1.0, the proposed standard should be considered a net benefit and prioritized for implementation. If the ratio is less than 1.0, the team should consider revising the approach to the intervention in order to achieve a net positive benefit, or at minimum, a cost-neutral solution.


A real-world application

At Virginia Commonwealth University (VCU) Health System in Richmond, our first attempt to assess the cost implications of implementing an ERAS-related improvement was with our colorectal surgery population in 2016.

A number of studies have shown that implementing a bundle of care for infection prevention in colorectal surgery improves outcomes, decreases length of stay, and reduces overall cost. A surgical site infection (SSI) prevention bundle was implemented in October 2016 at VCU Health to address high infection rates for colorectal surgery.

The SSI prevention bundle includes six elements to be applied in the perioperative care phase:

• patient hair removal in the preoperative unit in lieu of clipping in the OR

• maintaining normothermia, which is measured as body temperature >35.5°C, by using forced air warming in the preoperative unit and in the OR, and by prewarming the OR to 72°F before the patient arrives

• appropriate antibiotic prophylaxis (2,000 mg cefoxatin or a combination of 500 mg metronidazole and 2,000 mg cefazolin [patient weight <=120 kg] or 3,000 mg cefazolin [patient weight >120 kg])

• surgical wound protector

• wound irrigation with antibiotic solution

• skin closure tray with clean instruments, surgeon gown, and glove change.2

In 2015, the average cost of an SSI was as high as $25,000, depending on the type of surgery performed and the degree of infection. A 3-year study at Johns Hopkins suggested that a net loss in profit ranged from $4,147 to $22,239 per SSI, exclusive of the cost to backfill patients and cost of preventive interventions.3 The high cost of infections is especially concerning for organizations. Payers are shifting toward reimbursement models that deny payment for surgical complications, and government programs like the Hospital-Acquired Condition Reduction Program apply payment adjustments to hospitals with low performance on hospital-acquired condition quality measures.

Baseline infection data in the 10 months leading up to the bundle implementation (December 2015 to September 2016) showed 26 infections out of 212 colorectal procedures performed. The rate prior to implementation was 12.26 infections per 100 procedures, or a standardized infection ratio (SIR) of 1.67.2

For this calculation, we use the baseline SSI data and the proposed goal to reduce by 50% in order to estimate the overall cost benefit of implementing the bundle at our institution. Therefore, we calculate benefit as the average cost avoided for 13 infections, or $325,000. The cost of the colorectal closure PDS pack is $28.26 per surgical case. Additionally, a one-time investment of $1,200 is needed to purchase new instruments. For 212 surgical cases, the cost is calculated as $7,191 (table below). Using this approach, our resultant benefit-to-cost ratio is 45.19, strongly indicating a positive return on investment for the SSI prevention bundle.


Proven results

In the 10 months following implementation (October 2016 to July 2017), there were 13 infections identified out of 258 colorectal procedures performed. This resulted in a better than projected SSI rate of 5.04 infections per 100 procedures, SIR = 0.62. VCU Health has continued to sustain improved outcomes for colorectal surgery, reducing infection rates more than fourfold since 2016.

Implementation of the colorectal SSI prevention bundle at VCU Health resulted in a substantial reduction in infection rates, leading our organization to top decile performance in Vizient colorectal SSI with an SIR = 0.321 for calendar year 2018, outperforming facilities nationwide, according to Centers for Disease Control and Prevention data for National Healthcare Safety Network acute care hospitals, colon surgery in adults 18 years of age or older.4

A systematic benefit

The aggregation of benefit-to-cost ratios across quality standards will help to establish a practical guide to achieving the overall cost benefit of a systematic ERAS implementation. When applied to a timeline, these figures can provide a roadmap to an organization’s return on investment, and they support ERAS programs as essential to achieving strategic objectives to maintain or even improve on a competitive market advantage. ✥

Paula Spencer, MSHA, PMP, CPHIMS, is director, office of clinical effectiveness at Virginia Commonwealth University Health System in Richmond. She is also adjunct professor, department of health administration, at Virginia Commonwealth University.




Heather Albert, BSN, RN, CIC, is an infection preventionist with the infection prevention program at Virginia Commonwealth University Health System in Richmond.




Elaine Zierden, BSN, RN, CNOR, is a specialty team manager for bariatric, colorectal, surgical oncology, and trauma surgery at Virginia Commonwealth University Health System in Richmond.


Porter M E, Lee T H. The strategy that will fix health care. Harvard Business Review. 2013;91(10):50-70.

Albert H, Batalier W, Masroor N, et al. Infection prevention and enhanced recovery after surgery: A partnership for implementation of an evidence-based bundle to reduce colorectal surgical site infections. Am J Infect Control. 2019;47(6):718-719.

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