As many as 14% of spine surgeries over three years were deemed unnecessary, costing taxpayers $2 billion, according to a recent report published by the Lown Institute, a think tank promoting ideas for a just and caring system of health. The report even names specific hospitals. This raises critical questions: what drives the prevalence of these potentially unwarranted procedures, and why does RFK Jr., Secretary of Health and Human Services nominee, propose a radical overhaul of the system?
Central Planning and the Incentivization of Unnecessary Spine Surgery
At the core of modern healthcare’s economic architecture is the Current Procedural Terminology or CPT system, developed and controlled by the American Medical Association. These codes classify and quantify the work performed by physicians, from routine consultations to intricate brain surgeries. Each code is assigned a relative value based on factors such as time, complexity, risk, and resource requirements. Determining these values falls to the Relative Value Scale Update Committee, an entity under the AMA’s purview.
The task for the committee is daunting—how does one reasonably compare the relative value of a heart transplant to a lengthy obesity management consultation or the fixation of a femur fracture? The system, burdened by its central planning roots, struggles to reconcile competing priorities.
Further complicating matters is the zero-sum nature of healthcare economics for physicians. An increase in valuation for one service often necessitates a proportional decrease for another in some . Physicians, hospitals, and insurers operate within a constrained financial framework that amplifies market-based inefficiencies.
Spine surgery, given its complexity and technical considerations is given a particularly high relative work value unit. This is understandable and justified but susceptible to financial exploitation. High work value units and relatively lower barriers to entry inevitably attract more participants. As Dr. Anthony DiGiorgio, a neurosurgeon and health policy expert at UCSF, has demonstrated, the frequency of spine surgeries performed by non-surgeons—such as pain management specialists and anesthesiologists—has increased dramatically. For example, in his study, reimbursement for sacroiliac fusion performed by non-surgeons rose by 435% over a decade.
Dr. DiGiorgio encapsulates the issue succinctly: “Centrally planned systems fail to allocate resources efficiently, allowing hospital conglomerates to exploit highly reimbursed codes, such as those for spine procedures. Calling these procedures ‘inappropriate’ is misleading; we simply don’t know the true market equilibrium because centrally planned distortions obscure the Pareto optimal balance.”
Hospital Consolidation and the Proliferation of Unnecessary Spine Surgeries
Over the past two decades, the employment landscape for physicians has shifted dramatically, with a majority now working for hospital systems rather than maintaining private practices. This consolidation has aligned physician compensation with hospital revenue, making physicians increasingly salaried employees incentivized on volume. Contracts are heavily influenced by relative value unit production. This creates a milieu for productivity to outweigh prudence.
High-performing surgeons—those who conduct the most surgeries—are rewarded with greater access to operating rooms, institutional resources, and disproportionate agency within the system. This dynamic fosters an environment where aggressive surgical intervention is tacitly encouraged, regardless of medical necessity.
Hospitals are not structured to reward surgeon caution. Administrators are forced to evaluate spreadsheets that compare productivity: one surgeon performs 200 surgeries, generating $4 million for the hospital, while another performs 100 surgeries, generating $2 million. The latter has the potential to see reductions in operating time, staff, and institutional support, with resources reallocated to the more “productive” surgeon.
It’s important to recognize the financial incentives at the hospital level dwarf those of individual physicians. Hospitals are reimbursed under the Medical Severity Diagnosis Related Group or MS-DRG system. For example, while a surgeon might earn $1,000 to $3,000 for a neck fusion, the hospital receives $16,788 to $33,191, depending on the patient’s comorbidities. Medicare, understandably, pays hospitals more for sicker patients. Hospitals employ teams of coders to ensure all relevant medical risk factors are documented by physicians in notes, maximizing reimbursement capture. Subtle changes in documentation can mean tens of thousands of dollars in additional revenue.
Thus, the institutional focus shifts toward maximizing surgical volume by performing surgery on patients who are documented as being sick. Quality control mechanisms, such as peer reviews or outcome audits, may be nominally present but are often underutilized at a surgeon-specific level.
How Unnecessary Spine Surgery Happens in Practice
Consider a typical scenario: A patient with chronic lower back pain and comorbidities such as obesity and type 2 diabetes seeks relief. Initial consultations with conservative surgeons yield recommendations for physical therapy and weight loss. Frustrated by the lack of immediate results, the patient consults multiple surgeons until finding one willing to operate despite marginal indications.
The surgeon, aware that the patient might seek surgery elsewhere if refused, eventually, reluctantly, consents to the procedure. Risks, benefits, and likelihood of success are thoroughly discussed. The patient, desperate for relief, accepts the terms, and there is some actual potential for clinical benefit, maybe a 50% chance. However, regardless of the outcome (barring a catastrophe), the hospital and surgeon will benefit financially, while the patient bears minimal direct financial risk due to insurance coverage. This dynamic perpetuates a cycle where demand fueled by desperation intersects with supply driven by systemic incentives.
In a less consolidated healthcare market, surgeons who consistently over-perform unnecessary surgeries would see their reputations—and referrals—decline. However, hospital acquisitions of primary care practices have disrupted this equilibrium. By influencing referral pathways, hospitals can directly or indirectly nudge referring provides to send patients toward their employed specialists, shielding high-volume surgeons from the natural corrective forces of competition. The reason hospitals are buying up primary care practices is to impact downstream referrals to high-margin specialists. This is not malevolence but the natural byproduct of economic incentives: the more one rewards a behavior, the more prevalent it will become.
Examining the Lown Institute’s Report About Unnecessary Spine Surgery
The Lown Institute’s report raises important points but warrants some discussion. Hospitals do not perform surgeries; surgeons do. The report thus implicates either inadequate institutional oversight of hospital-employed surgeons or unchecked private practice surgeons operating within hospital systems. The reality is more complex.
Defining “unnecessary surgery” remains an enormous pragmatic challenge. Certain diagnoses, such as scoliosis or trauma, provide clear surgical indications. The report makes notes of that. However, the Lown Institute’s investigation cannot account for all subtleties in clinical decision-making. The report methodology relies on billing claims data rather than on clinical records. While claims data offers insights, it cannot capture the nuances of individual clinical decisions.
Their report does however create a very interesting pragmatic question.
Why would a hospital want to start an inquiry on one of its top revenue-generating surgeons?
Smaller hospitals, particularly those without the rigorous oversight of academic institutions, are less likely to question the indications for surgery performed by high-revenue surgeons.
As Dr. Vikas Saini, president of the Lown Institute, commented for this article: “Our system rewards the doing of procedures, not necessarily their appropriateness. When doctors and hospitals are paid more for doing more, it’s easy for everyone to look the other way, even if the surgery offers little benefit to the patient.”
At academic centers and some bigger hospital conglomerates, outcomes are somewhat mitigated through tracking of objective patient outcomes, often by third-party research entities. These processes, while incredibly imperfect, can create a culture of accountability or at least a benefit of a Hawthorne effect. It’s not the panacea, but there are less places for the surgeon to hide. At my hospital, for example, I know that my cases, outcomes, and indications will be presented each Friday morning at our academic spine conference. My peers will see what I did, why I did it and what the patient outcome was.
The Case for Increased Spine Surgery
It is critical to acknowledge the legitimate increased need for spine surgery. As the population ages, more patients need surgery for spinal pathology. Surgical techniques and perioperative care have improved outcomes and safety. Minimally invasive surgery has made many spine procedures outpatient surgeries. We are doing surgery now that was not even possible five years ago. For patients with severe spinal deformities, the quality-of-life burden for those living with kyphosis and scoliosis rivals those seen in oncology patients. Data consistently show that spinal deformity patients live longer, healthier lives following surgical intervention. There is an absolute need for evidence-based spine fusion surgery.
RFK’s Proposal: Will It Impact Unnecessary Spine Surgery?
Robert F. Kennedy Jr. has proposed removing the AMA’s central role in determining billing and work value codes, aiming to redirect resources toward preventive care and chronic disease management. While this approach could address some disparities, it is unlikely to resolve the systemic issues at play.
Physicians account for only 15% of healthcare expenditures, and their reimbursement has declined by 29% since 2001, adjusted for inflation. Physicians may be the main decision-makers but addressing these broader inefficiencies is essential.
I would urge RFK to also interrogate the other remaining 85% of healthcare expenditure.
Why do hospital-based procedures cost exponentially more than when the exact same services are performed at an ambulatory surgical center? Why has UnitedHealth’s revenue increased to $14 billion in 2024 while health insurance premiums have increased 22% over five years? Why can hospitals employ physicians but physicians can’t own hospitals? Why has private practice all but disappeared? Why did the number of hospital administrators grow by 3200% from 1975 to 2019? And even more so why has hospital executive pay increased 93% in the last ten years?
Answering those questions would make America’s health system healthy again
