A children’s hospital within an adult hospital recognized the need to attract pediatric surgical talent and expand its breadth of services.
By John Gantner, Yi-Horng Lee, M.D., and Joseph G. Barone, M.D., MBA
When Bristol-Myers Squibb Children’s Hospital (BMSCH) in New Brunswick, New Jersey opened in 2001, it filled a need for pediatric health care services in the region. Care could now be provided in a hospital dedicated to pediatrics. As the pediatric counterpart of Robert Wood Johnson University Hospital, BSMCH has its own entrance, emergency room, radiology suite, pediatric intensive care unit and a level III neonatal intensive care unit.
However, BMSCH lacked one feature—a dedicated pediatric operating suite. The BMSCH team set out to add a pediatric operating rooms (OR) to encourage pediatric surgical recruitment and reduce crowding in the adult ORs and expand pediatric services.
New pediatric operating rooms
The absence of a pediatric OR led to slow surgical staff recruitment—pediatric surgeons want to work in a pediatric OR. As a result, pediatric surgical volume was stagnant from 2006 to 2013.
Meanwhile, adult surgical volume at Robert Wood Johnson University Hospital was booming, and there was a need to find additional OR capacity. The solution was a new pediatric-specific OR for BMSCH. It was estimated that a new pediatric OR would increase adult capacity by 15% to 20% as pediatric surgeons shifted to the new OR.
The hospital’s top floor was empty and became home to six fully-integrated ORs, six private intake rooms and 10 post-operative bays, without disrupting any existing services. Each OR was fully staffed immediately. Excess staff allowed the hospital to provide great customer service and adapt as volume increased, rather than trying to grow the staff as the need increased in real time.
Surgical growth and development
The new ORs sparked surgical growth that has increased each year since opening, with new surgeons joining the team and an overall increase in pediatric surgical case volume. The number of cases increased rapidly as community surgical specialists were eager to work in a pediatric OR.
The new operating suite transformed the way care could be provided. Now, more medically complex children requiring multidisciplinary surgical care could come to BMSCH and have their needs met. The pediatric operating room case mix index increased from 1.67 in 2012 to 2.40 in 2017. This resulted in higher net patient service revenues, which offset the increased operating costs associated with the new operating room.
Quality, safety and key performance indicators
As new nursing staff was hired, dedicated surgical care teams formed spontaneously, improving patient care and outcomes. Pediatric nurses cared for children throughout their hospital stay, improving quality and patient satisfaction. Although volume was increasing, BMSCH experienced a rate reduction in major complications after surgery and surgical site infections.
BMSCH embarked on new quality initiatives, such as Solutions for Patient Safety and the Pediatric National Surgical Quality Improvement Program. Enhanced surgical programs resulted in external quality recognition from U.S. News and World Report and the American College of Surgeons for trauma and bariatric surgery.
Although cost was never a main driver during the planning process, the new operating room came with expected incremental costs. In the first year after opening, total operating room cost per case increased. However, increased volume and case mix offset the increased cost of care and the contribution margin for the entire pediatric surgical service increased after the new operating rooms opened.
The improved contribution margin resulted from several factors:
- Increased volume and a higher case mix index resulted in more net patient service revenues.
- More outpatient cases were being performed and had a higher contribution margin than inpatient cases, which were declining nationally in terms of volume and contribution margin.
- Variable costs associated with cases including staffing and consumables increased as expected after the new operating rooms opened, but those costs leveled out over the next four years and were offset by increased case volume.
Looking back, the team at BMSCH would have built an OR sooner. The new operating room was a major driver of volume and case complexity that fueled the growth and development for the hospital.
Constructing a dedicated pediatric OR is a major undertaking for any hospital and costs are a concern. However, the increase costs that were associated with the new ORs tended to be offset by volume and case complexity, resulting in an improved overall contribution margin for the pediatric operating room. These advantages need to be carefully modeled to fully appreciate the financial impact an OR might have on a hospital.
John Gantner is president and CEO of Robert Wood Johnson University Hospital; Yi-Horng Lee, M.D., is surgeon-in-chief at Bristol Myers Squibb Children’s Hospital and associate professor of Surgery and Robert Wood Johnson Medical; and Joseph G. Barone, M.D., is chief of Pediatric Urology at Bristol-Myers Squibb Children’s Hospital. Send questions or comments.