Monte Carlo simulation to analyze the cost-benefit of radioactive seed localization versus wire localization for breast-conserving surgery in fee-for-service health care systems compared with accountable care organizations

OBJECTIVE. In breast-conserving surgery for nonpalpable breast cancers, surgical re-excision rates are lower with radioactive seed localization (RSL) than wire localization. We evaluated the cost-benefit of switching from wire localization to RSL in two competing payment systems: a fee-for-service (FFS) system and a bundled payment system, which is typical for accountable care organizations. MATERIALS AND METHODS. A Monte Carlo simulation was developed to compare the cost-benefit of RSL and wire localization. Equipment utilization, procedural workflows, and regulatory overhead differentiate the cost between RSL and wire localization. To define a distribution of possible cost scenarios, the simulation randomly varied cost drivers within fixed ranges determined by hospital data, published literature, and expert input. Each scenario was replicated 1000 times using the pseudorandom number generator within Microsoft Excel, and results were analyzed for convergence. RESULTS. In a bundled payment system, RSL reduced total health care cost per patient relative to wire localization by an average of $115, translating into increased facility margin. In an FFS system, RSL reduced total health care cost per patient relative to wire localization by an average of $595 but resulted in decreased facility margin because of fewer surgeries. CONCLUSION. In a bundled payment system, RSL results in a modest reduction of cost per patient over wire localization and slightly increased margin. A fee-for-service system suffers moderate loss of revenue per patient with RSL, largely due to lower reexcision rates. The fee-for-service system creates a significant financial disincentive for providers to use RSL, although it improves clinical outcomes and reduces total health care costs.