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The Untold Economic Advantages of
Robotic Surgery
Robert Poston, MD
Chairman, Cardiothoracic Surgery
St Francis Medical Center, Trenton, NJ
Conventional Wisdom: Robotic
surgery is more expensive than
open or laparoscopic surgery
LIMITATIONS OF LITERATURE: ACCOUNTING FOR DYNAMIC COSTS
• Standard accounting practice for
determining ROI
• Spread out fixed costs of capital over the
timeframe in which revenue is generated
• Hospitals allocate fixed costs to the
responsible department
Decision to Purchase a Robot Decision to Use a Robot
• Not standard practice for calculating
costs/profitability of specific procedures
Allocate fixed
robot costs
only to
robotic cases
Costs/case
increased
for robotics
More cases
done open/
laparoscopc
Decreased
volume of
robotic
cases
Sunk cost fallacy
LIMITATIONS OF LITERATURE: AMORTIZATION OF CAPITAL EQUIPMENT
AVAILABLE SAFEGUARDS
Totally endoscopic (TECAB)
Minithoracotomy
safety frontier
Unsafe
Safe
Robotic Heart Surgery Tradeoffs
LESSINVASIVENESS
Sternotomy
• Standardized, automated
• Prerequisites understood
• Easy access to safety net (CPB)
LESSINVASIVENESS
AVAILABLE SAFEGUARDS
Safe
Totally endoscopic (TECAB)
Minithoracotomy
safety frontier
Unsafe
Safe
Robotic Heart Surgery Tradeoffs
Sternotomy
• Standardized, automated
• Prerequisites understood
• Easy access to safety net (CPB)
safety frontier Unsafe
Safe
Culture of safety
- “no blame” approach
- psychological safety
- collaboration
LESSINVASIVENESS
AVAILABLE SAFEGUARDS
Expectations
Time
Performance
Low
High
Low
High
Rapid Improvements
1st case …Nth case
Expectations-
reality gap
Robotic program
introduced
Trial and error
Status quo
Life Cycle of Robotic Surgery
Conclusions
1. Control for costs that are dynamic or sunk
2. Focus on the opportunity costs
3. Tie value into the “big picture”
Rational economic analysis of robotics:

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Society of Laparoscopic Surgery, Invited Presentation, Aug 2015

  • 1. The Untold Economic Advantages of Robotic Surgery Robert Poston, MD Chairman, Cardiothoracic Surgery St Francis Medical Center, Trenton, NJ
  • 2. Conventional Wisdom: Robotic surgery is more expensive than open or laparoscopic surgery
  • 3. LIMITATIONS OF LITERATURE: ACCOUNTING FOR DYNAMIC COSTS
  • 4.
  • 5. • Standard accounting practice for determining ROI • Spread out fixed costs of capital over the timeframe in which revenue is generated • Hospitals allocate fixed costs to the responsible department Decision to Purchase a Robot Decision to Use a Robot • Not standard practice for calculating costs/profitability of specific procedures Allocate fixed robot costs only to robotic cases Costs/case increased for robotics More cases done open/ laparoscopc Decreased volume of robotic cases Sunk cost fallacy LIMITATIONS OF LITERATURE: AMORTIZATION OF CAPITAL EQUIPMENT
  • 6.
  • 7.
  • 8.
  • 9.
  • 10.
  • 11.
  • 12.
  • 13. AVAILABLE SAFEGUARDS Totally endoscopic (TECAB) Minithoracotomy safety frontier Unsafe Safe Robotic Heart Surgery Tradeoffs LESSINVASIVENESS Sternotomy • Standardized, automated • Prerequisites understood • Easy access to safety net (CPB) LESSINVASIVENESS AVAILABLE SAFEGUARDS Safe
  • 14. Totally endoscopic (TECAB) Minithoracotomy safety frontier Unsafe Safe Robotic Heart Surgery Tradeoffs Sternotomy • Standardized, automated • Prerequisites understood • Easy access to safety net (CPB) safety frontier Unsafe Safe Culture of safety - “no blame” approach - psychological safety - collaboration LESSINVASIVENESS AVAILABLE SAFEGUARDS
  • 15. Expectations Time Performance Low High Low High Rapid Improvements 1st case …Nth case Expectations- reality gap Robotic program introduced Trial and error Status quo Life Cycle of Robotic Surgery
  • 16. Conclusions 1. Control for costs that are dynamic or sunk 2. Focus on the opportunity costs 3. Tie value into the “big picture” Rational economic analysis of robotics:

Editor's Notes

  1. However, the expert recognizes that limitations of available technologies, the team and organization where he/she operates causes a trade-off btw safety and less invasiveness and this creates a frontier. is Attempting to operate outside the frontier by performing less invasive surgery on patients that require more safeguards than inherently available is a hallmark of inexperience.
  2. However, the expert recognizes that limitations of available technologies, the team and organization where he/she operates causes a trade-off btw safety and less invasiveness and this creates a frontier. is Attempting to operate outside the frontier by performing less invasive surgery on patients that require more safeguards than inherently available is a hallmark of inexperience.