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Eye-Opening Analyses of the Economics of Ophthalmology
Kellogg PGY-4 David Portney, M.D., combines a passion for ophthalmology with a keen interest in healthcare economics. He is part of a team tapping into Michigan Medicine’s wealth of health services data to study some of the most challenging aspects of delivering ophthalmic care in an academic medical setting.
For one group of studies, an accounting tool called time-driven activity-based costing was used to analyze Kellogg data on the costs and insurance reimbursements associated with complex cataract and retinal procedures.
“We compared the incremental costs and Medicare reimbursement for standard to complex cataract surgery and vitrectomy,” Dr. Portney explains.
The team found that a complex cataract procedure costs $877 more to perform than a standard procedure. But Medicare reimburses only $231 more. The gap is even more pronounced for retinal detachment repair. A complex pars plana vitrectomy costs about $2,700 more than a standard procedure, while the incremental reimbursement is only about $430.
“The numbers help explain what Kellogg surgeons are observing anecdotally—why more and more complex cases are being referred to academic medical centers like ours,” he says. “Surgeons in private practice are finding the incremental cost of more difficult cases is just too high. There is greater financial incentive in seeing more patients with less complicated conditions.”
The consequences for access to care are significant. With fewer options, patients needing complex care may wait longer and travel farther. The stakes are especially high in retinal detachment, where timely intervention is critical to rescuing vision.
A similar cost/value analysis was conducted on corneal transplantation. In 2017, Kellogg began using preloaded corneal grafts for Descemet membrane endothelial keratoplasty (DMEK), which adds about $500 to the tissue costs associated with the transplant. The analysis showed a reduction of about 14 minutes in surgical time, saving about $450 after covering the additional cost of the grafts.
“This example is a win-win,” Dr. Portney notes. “Surgeons have further justification to use preloaded grafts, and patients spend less time in the operating room.”
Another topic analyzed: ophthalmology resident call volume.
Several years of data show a significant increase in call volume, both in the Adult Emergency Department and systemwide. In 2019, Michigan Medicine emergency room physicians consulted with on-call ophthalmologists 1,255 times. By 2023, that number doubled. Over the same period, systemwide ophthalmology consult volume increased from 2,730 to 4,385.
“The burden on residents is especially pronounced when you consider that, in the same time frame, there was no corresponding increase in the number of ophthalmologists in the on-call pool,” he notes.
“These analyses have the potential to inform policies that improve quality and access to ophthalmic care at Michigan Medicine and other academic medical centers,” says Dr. Portney. “It’s exciting to be part of an institution with unparalleled data resources and the foresight to put them to work.”
