CANS President
Cause and Effect
Dear Colleagues,
Today was César Chávez Day, a holiday observed in the University of California system. I found myself on call. Following several demanding weeks and long hours, I was reminded of the intense days and nights in residency. One of my fondest residency memories was stepping out with my attending and co-residents for a quick sushi break at a small restaurant near the hospital. So, in keeping with that tradition, I decided to check out a little hole-in-the-wall sushi place my anesthesiologist recommended, insisting it served some of the best sushi he had ever tasted.
I was initially apprehensive. The restaurant sat in a corner strip mall in a not-so-appealing area, and a sign on the door stated “Reservation Only” and “We Reserve the Right of Not Serving You.” Undeterred, I stepped inside anyway. Immediately, I was greeted with another copy of that same disclaimer. It’s a very small, older establishment with scraped walls and worn furniture—easily the type of place one might suspect could lead to a regrettable case of food poisoning. The sushi chef, peering in his reservation book, likely screening me mentally, hesitated before finally inviting me to take a seat at the empty bar. Another sign reading “We Reserve the Right of Not Serving You” hung prominently behind him.
Despite the inauspicious appearance and off-putting notices, the sushi was fantastic—albeit accompanied by a substantial bill. The check included a suggested 20% tip, which felt less like a suggestion and more like an expectation.
As I left, I found myself reflecting on how differently we practice neurosurgery compared to how this restaurant treats its patrons.
In neurosurgery, we don’t turn away anyone who comes through the door—whether it’s in the emergency room or a clinic —regardless of how difficult or belligerent a patient might be or their ability to pay the bill. We certainly don’t post signs announcing a “right” to withhold care. Even when our schedules are full and resources are stretched thin, we strive to provide the best possible care, often with a compassionate smile and in infrastructure that is sometimes less than ideal.
I believe wholeheartedly in the calling of our profession and in the fact that many patients genuinely appreciate what we do, holding us to the highest standard. During Doctors’ Appreciation Week, I want to thank each of you for upholding these values. You do an incredible job every day, and I am proud to be a part of this profession with you.
Best regards,
Sam Ghostine, MD
President, California Association of Neurological Surgeons (CANS)
This month’s graphic is here to highlight the power of AI. Those on social media may have seen the trend of ghiblifying images, referring to the art style of Studio Ghibli, a Japanese animation studio. The trend has seen iconic images re-imagined in the characteristic animation style. Here, I demonstrate how easily ChatGPT was able to do the same with an iconic CANS photo. With one prompt, the AI was able to convert Dr. Wade & co. Along with being fun, this demonstration of AI technology shows how far we have come in such a short time. It’s an amazing tool, and much more useful than simply creating fun images.
The ambulatory neurosurgery center founded by Dr. Elad Levy and his colleagues in Buffalo, New York, is revolutionizing neurosurgical care. This innovative ambulatory surgery center (ASC) allows complex procedures such as aneurysm treatments and the removal of small brain tumors to be performed on an outpatient basis. With a physician-run ASC, the institution has low turnover times and exceptionally high patient & physician satisfaction. The increased efficiency increases patient access, reduces overall healthcare costs, and streamlines care delivery. Yet, despite these groundbreaking benefits, the ASC faces a financial disadvantage with Medicare. Many similar centers experience the same issue. It highlights just how Medicare regulations can stifle innovation and suppress competition.
Medicare has countless rules and regulations. That regulatory burden alone is enough to stifle innovation. For the ASC, one major barrier is Medicare’s inpatient-only list, which classifies certain procedures exclusively for inpatient hospital settings, regardless of advances in technology and care models. As a result, Medicare patients needing aneurysm or certain tumor procedures cannot utilize the ASC, forcing them into traditional inpatient hospital care. Cash pay or privately insured patients have access to ASC level treatments, as Medicare rules don’t apply. Until recently, many spinal fusions were also on the Medicare inpatient only list. The fact that it was recently changed doesn’t change the fact that the inpatient only list continues to stifle innovation. This outdated regulation disregards advances in minimally invasive and outpatient-capable surgical techniques and deprives patients of more efficient, patient-centered care.
Another regulatory obstacle is Medicare’s lack of site neutrality. Currently, Medicare reimburses hospitals at significantly higher rates for identical procedures compared to ASCs, creating an inherent financial disincentive to transition care to more efficient outpatient settings. The ASC can negotiate with private payors, earning their business by offering lower rates in exchange for higher volume. However, with Medicare, this exchange doesn’t exist. Medicare simply pays the ASC less for the exact same procedure. This payment disparity rewards hospitals for providing more expensive, less patient-friendly care, penalizing physician-led ASCs that offer identical services more efficiently and cost-effectively.
Physician-led ambulatory neurosurgery centers exemplify innovation by prioritizing the patient-physician relationship and clinical efficiency. These facilities reduce administrative burdens and enhance patient-centered care, resulting in superior outcomes, greater patient satisfaction, and lower costs. In fact, many, including myself, argue that the success of physician-led ASCs supports the case for physician-owned hospitals.
For these innovative models to achieve their full potential, Medicare policies must evolve. Eliminating the inpatient-only list and adopting site-neutral payments would significantly enhance patient access, healthcare efficiency, and cost savings. These policy changes would empower innovative care delivery models, such as Dr. Levy’s ASC, benefiting patients, providers, and the healthcare system as a whole.
Fundamentally, wealth is measured as revenue minus expenses. In healthcare, this equation is complicated by rising costs and healthcare administrative costs. The United States, which leads the world in healthcare spending at nearly 18% of GDP, faces increasing scrutiny over what exactly we’re paying for. In 2020, the United States spent about $4.1 trillion or $12,530 per person on health care. A JAMA analysis estimated that $760 billion to $935 billion- approximately 25% of total healthcare expenditure, is wasted annually due to overtreatment, pricing challenges, fraud and administrative overhead. Efforts to reduce this waste could generate savings of $191 billion to $286 billion annually [1].
One of the most significant culprits is administrative overhead. A NEJM study found that administrative costs account for 31% of U.S. healthcare spending compared to just 17% in Canada [2]. In California alone, billing- and insurance-related (BIR) activities consume up to 22% of private insurance spending [3]. Himmelstein et al. further emphasized that U.S. hospital administrative costs are the highest among eight developed nations, reaching 25.3% of total hospital expenditures [4]. These costs are largely driven by the complexity of a multi-payer system, insurer overhead, redundant documentation, and regulatory burdens.
California offers a microcosm for examining the broader cost structure. Landsdale et al, conducted a study comparing healthcare costs across San Francisco (SF), Sacramento, Los Angeles (LA), and San Diego (SD). In Los Angeles County, hospitals report the lowest per capita private insurer costs yet the highest Medicare fee-for-service (FFS) expenditures. This paradox is linked to market competition and service overutilization: more competitive markets drive down private rates, while excess capacity enables higher Medicare billing volume [5].
The potential to reduce waste without sacrificing care quality is not just theoretical. NYU Langone Health, for example, implemented a value-based management program that saved nearly $54 million over three years through interventions like discharge optimization, supply chain management, and more granular cost accounting, without increasing readmissions or mortality [6]. Similarly, a study at Walter Reed Medical Center demonstrated that modifying electronic health record order sets reduced repetitive lab testing by 19%, saving $290,000 over two years without compromising care [7]. Repetitive inpatient lab testing in the face of clinical stability is a large healthcare cost and is a target by the “Choosing Wisely” campaign.
Whether skeptical or optimistic, technology- particularly artificial intelligence (AI), represents a transformative lever for systemic cost reduction. AI can automate repetitive administrative tasks, optimize billing, streamline credentialing, and enable real-time data-sharing platforms between payers and providers. At Kaiser Permanente in Oakland, CA, they are using new AI tools (Abridge AI) to assist with clinical note writing. Clinical note automation and assistance can not only reduce burnout and reduce the cost of paid scribes but also increase physician efficiency and value provided to patients through time saved. According to a 2025 review, AI integration could mitigate up to $168 billion in administrative costs annually while improving care quality through data-driven decision-making [8].
Meanwhile, community-based innovations also offer replicable models. A CMS-funded evaluation of 14 healthcare delivery programs found that interventions incorporating telehealth, behavioral health, and health IT were significantly more likely to reduce spending and service use [9]. They also found that service delivery models targeting patients with substantial nonmedical needs and leveraging nonclinical staff resulted in reduction in services and lower medical spending.
The question remains, can we meaningfully reduce costs while maximizing value? The evidence suggests yes, but doing so will require multi factorial strategy that blends policy reform, technological adaptation and strategic analysis of system cost/value. It is likely that targeting administrative costs through a few core principles will likely lead to the best outcomes. In the end we hope that less can equal more.
References
Increased centralization is not the answer
Anthony DiGiorgio, DO, MHA
Gabriel and Jose did a fine job outlining the issues discussed in this month’s piece from JAMA, which addresses the U.S. health care administrative cost crisis. Their review highlights valuable real-world examples of administrative simplification, such as the approaches implemented by Kaiser Permanente and NYU Langone. However, these very examples underscore a critical oversight by the JAMA authors: greater efficiency in healthcare administration is unlikely to arise from increased centralization, as proposed by Istvan and colleagues. Instead, decentralization and bottom-up innovation offer a more realistic and effective pathway forward.
The JAMA authors advocate for centralizing administrative processes via a unified transaction platform across health plans and centralized deployment of artificial intelligence. While superficially appealing, this centralized approach invariably introduces its own inefficiencies. Healthcare’s intrinsic complexity and variability across different practice settings mean that standardized, one-size-fits-all solutions frequently fail to meet nuanced patient-physician needs. Moreover, centralization can inadvertently stifle innovation by imposing rigid structures, hindering the adoption of novel technologies and solutions. History repeatedly demonstrates this pattern, from federally mandated EHRs to cumbersome quality reporting metrics, where well-intentioned central planning unintentionally exacerbates administrative burdens.
A superior alternative lies in decentralization, encouraging market-driven experimentation and innovation at the local level. Allowing multiple competing technologies and management approaches to coexist fosters natural evolution toward greater efficiency, as exemplified by the dynamic competition among AI platforms. Let the market, not a government bureaucrat, decide whether Grok, Claude, or ChatGPT best serves clinical and administrative needs. Transparent pricing, clear market signals, and locally empowered decision-making consistently outperform central planning in fostering innovation, adaptability, and long-term efficiency.
The historical record speaks clearly: decentralization, competition, and flexibility, not rigid centralization, are the true engines of efficiency and innovation in healthcare administration.