How Managed Care May Choose Hospitals for Contracts for Laparoscopic Cholecystectomy, Weiland D. Figure 1. Decision tree for 5% conversion rate. Figure 2. Sensitivity analysis for conversion rates of 5%. were either old patients with complications or young patients with advanced disease and complicated courses. Little could be done to reduce charges except to either lessen the conversion rates or costs for laparoscopic chole- cystectomy. In order to get a precise estimate of laparoscopic charges, match pair comparisons from the same data base of charges between open cholecystectomy and converted laparoscop- ic cholecystectomy were accomplished. Since the compar- isons matched age, sex and similar diagnosis (ex.: acute vs. chronic cholecystitis, pancreatitis, etc.), many confounding variables could be eliminated. This suggested that the only reasons for the increased charges were the charges for laparoscopy. Other reasons for conversion, such as intra- operative complications, were eliminated because none of the matched pairs had serious complications or concomi- tant disease. Therefore, this comparison provided a rela- tively straightforward technique for statistical comparison to determine the charges for laparoscopy. MATERIALS AND METHODS A retrospective review of 70 cholecystectomy patients was conducted from a four-year data base of 633 patients who had undergone cholecystectomy. Thirty-five patients with converted laparoscopic cholecystectomies and thirty-five patients with open cholecystectomies were selected from the data by matching for age, sex and similar diagnosis. A paired sample t-test was used for statistical analysis with significance at the p=0.05 level. Decision tree and sensitiv- ity analyses were then used to choose the most cost-effec- tive operation and then determine what the limitation of charges would be needed to make laparoscopic cholecys- tectomy cost-effective. RESULTS Twelve males and 58 females matched successfully. The average age was 37 years (range = 15-70 years) (standard deviation [sd] = 15.9). The average charge for converted laparoscopic cholecystectomies was $19,922 (sd = $7,134), and that of open cholecystectomies, $13,042 (sd = $9,715) (p=<0.01). The amount attributed to laparoscopy was $6,880 ($19,922 - $13,042). Decision tree analysis showed that, regardless of the rate of conversion, open cholecys- tectomy was more cost-effective. However, if charges could be reduced to certain levels, depending on the con- version rate, laparoscopic cholecystectomy would become cost-effective. DISCUSSION Steiner reviewed surgical rates and operative mortality for open and laparoscopic cholecystectomy in Maryland and 286 JSLS (1997)1:285-288