How Surgery Saves Money: A Paradox Explained

Tom Emerick1, Nelson Hendler, MD, MS2

1President, Emerick Consulting, former benefits executive for Burger King, British  Petroleum and Walmart; 2CEO, Mensana Clinic Diagnostics, former assistant professor of neurosurgery, Johns Hopkins University School of Medicine, and past president -American Academy of Pain Management

International Journal of Pain Research and Treatment


“A new analysis from U.S. federal government actuaries say that Americans spent $3.65 trillion on healthcare in 2018, according to a report from Axios. “1  This impacts on companies, where health insurance benefits are the second largest cost in a service business, and 3rd largest in manufacturing business2.  Back pain alone accounted for $86 billion a year in 2008 3. The top 5 expenses for a commercial line of insurance were for back pain, osteoarthritis, childbirth, injuries, and non-hip/non- spine fractures4.  Work related injuries cost an estimated $1.2 trillion annually, which includes lost wage payment, medical care, and short and long term disability5.

Of all health care expenses paid by a company, workers’ compensation becomes the most expensive, since the company pays not only for medical care, but also the lost wage of the employee. This is usually 66% of the employee’s salary, which come to the employee tax free. This provides the employee with essentially the same income received when at work. These generous benefits lead insurance adjusters to suspect potential for abuse. Estimates of fraudulent claims range from 1% to 80% depending on unsubstantiated reports in the insurance literature6,7,8,9.

However, methods to identify fraudulent cases are not always productive. The State Auditor of the State of California reported that the $30,000,000 a year spent by the State of California to detect workers’ compensation fraud was not cost effective10. Detection methods used include Functional Capacity Evaluations (FCEs). However, Feeler and Schapmire in a review of 180,000 patients found that FCEs were subjective and had no predictive nor diagnostic value11. Attempts to blame prolonged recovery on psychological issues, using the Minnesota Multiphasic Personality Inventory MMPI are consistently thrown out of court often 12.

The most reliable method of fraud detection is the Pain Validity Test, which can predict with 95% accuracy who will have abnormal medical tests, and predicts with 85%-100% accuracy who will not have medical test abnormalities, i.e. who is faking or malingering 13,14,15.  In a head to head comparison with the MMPI, in the same group of patients, the MMPI had no predictive ability 13,14,15. The Pain Validity Test has always been admitted as evidence in 30 cases in 9 states, which are listed on 16.

Once an injured worker has been identified has having a valid complaint of pain, the next step is to o identify the cause of the pain, and properly treat the worker.  Research from several sources at Johns Hopkins Hospital report that 40%-80% of chronic pain patients are misdiagnosed 17,18,19. When accurately diagnosed, 50%-63% of patients required surgery to improve 18,19. While the “common wisdom” is that surgery is expensive, a more granular case by case examination documents that this is fallacious thinking. The following case examples show the benefit of accurate diagnosis and the application of the correct surgery resulting in significant cost savings.

Keywords: Surgery Saves Money, Paradox Explained

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How to cite this article:
Tom Emerick, Nelson Hendler. How Surgery Saves Money: A Paradox Explained. International Journal of Pain Research and Treatment, 2020, 3:17. DOI: 10.28933/ijprt-2020-07-2205


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