What “True” Surgical Costs Reveal About Healthcare Affordability

When people talk about making healthcare more affordable, surgery is often where the conversation gets real. Surgical care is essential — and expensive. Yet one of the biggest barriers to improving affordability isn’t just the price of surgery itself. It’s the lack of transparency needed to measure and benchmark the full cost consistently. In a 2025 analysis, we examined six common surgical procedures. The findings revealed several factors that meaningfully influence how total episode costs should be evaluated and compared.

This isn’t a technical nuance — it’s foundational. Reliable measurement is a prerequisite for productive conversations about affordability, because you can’t improve what you can’t clearly see. Below are three insights surfaced through this surgical cost analysis.

False Variability

Comparing costs using a single claim line or CPT code often produces misleading results. These differences frequently reflect billing fragmentation rather than true variation in care.

For example, outpatient hospital facility costs for total knee replacement (CPT 27447) in the Houston area showed significant variability when viewed at the code level, with a coefficient of variation of 47%. When those same cases were reconstructed as validated episodes, variability dropped to 25%.

Better measurement reduced noise and made comparisons more meaningful.

Evaluating procedures at the episode level produces more consistent and reliable information. This approach helps isolate variation that matters — actionable differences in cost that can inform decision-making.

Site of Care

Surgical procedures occur across a range of care settings, increasing access for patients while also revealing potential cost efficiencies.

National averages for knee arthroscopy were $11,976 in outpatient hospitals compared to $8,921 in ambulatory surgery centers (ASCs). Gallbladder removal episodes averaged $36,428 in inpatient settings versus $18,010 in outpatient settings — roughly half the cost.

These differences underscore how site-of-care decisions can significantly influence total episode cost without necessarily changing the procedure itself.

Geographic Variation

It’s no surprise that where you live can have a substantial impact on your expenses, but the geographic cost influence is often even stronger in healthcare. The analysis highlighted notable geographic variation across markets.

Average total knee replacement episodes were $71,377 in the New York–Newark–Jersey City area compared with $51,862 in the Dallas–Fort Worth–Arlington region.

Understanding these regional differences is essential for evaluating affordability in context — and for identifying where variation reflects local market dynamics versus opportunities for improvement.

Clarity in Action

Improving affordability doesn’t require lowering standards of care. It requires better transparency. Clear insight into what drives cost — and more consistent ways to compare similar care. Measuring total episode cost helps distinguish where variation is justified (driven by patient complexity or clinical need) and variation driven by avoidable price or process differences.

The shared goal is accessible, high-quality care that more people can afford. A practical first step is measuring the full episode — and using the right data to surface insights that lead to informed action.

As we refresh our data analysis for 2026, we will be incorporating additional perspectives to continue surfacing meaningful trends and actionable insights.