Healthcare Economics of Weight Loss Surgery

| October 10, 2007

by Limaris Barrios, MD, and Daniel B. Jones, MD

From Harvard Medical School, Beth Israel Deaconess Medical Center, Boston, Massachusetts


Obesity is a multifactorial disease of global proportions,[1] and one that is associated with very serious medical conditions, psychosocial problems, and major health costs. It is estimated that 1.7 billion individuals are obese in the world, and approximately one third of Americans are obese.[2] In addition, the prevalence of obesity and the number of bariatric surgeries being performed in the United States have increased dramatically over the last several years. The purpose of this article is to summarize findings from recent studies that elucidate the financial implications of these trends. Specifically, this article will review the high medical costs associated with obesity-related comorbid conditions, and also will discuss the indirect costs to employers of obese individuals.

Obesity is defined in an adult as someone with a body mass index (BMI) of 30 or greater. The BMI is calculated by dividing mass (in kilograms) by height (in meters squared). Furthermore, morbid obesity is defined as a BMI of 40 or greater (or 35 in the presence of comorbidities). It has been well established that obesity is directly related to very serious medical conditions, such as obstructive sleep apnea, diabetes mellitus, hypertension, hyperlipidemia, gastroesophageal reflux disease, weight related arthropathies, depression, cancer, and even premature death. For example, a 25-year-old morbidly obese man will live approximately 12 years less than his normal weight counterpart.[2] It is also important to mention that bariatric surgery has become a very valuable treatment option for patients with morbid obesity. Not only does it provide an effective weight loss therapy, but frequently cures or improves many comorbid conditions, reduces mortality, and ultimately reduces healthcare costs. The 2004 Journal of the American Medical Association study that compiled data from 136 studies with a total of 22,094 patients showed bariatric surgery resulted in the resolution of diabetes in 76 percent of patients; hypertension was eliminated in 61.7 percent; obstructive sleep apnea in 85.7 percent; and high cholesterol levels decreased in more than 70 percent of patients who underwent bariatric surgery.[2] Christou, et al., showed an absolute mortality reduction of 5.49 percent (P<0.001) when comparing 1035 patients who underwent weight loss surgery with 5746 controls, in a five-year follow-up.[3]

Unfortunately, the prevalence of obesity in the United States has been steadily increasing over the last 20 years. It is estimated that obesity prevalence in the US doubled from 1986 to 2000, while extreme obesity increased 400 percent from 1983 to 2000.[4] According to Buchwald, 65 percent of the US adult population is overweight or obese, 30.6 percent are obese, and 5.1 percent are extremely obese.[2] Results from the 2003–2004 National Health and Nutrition Examination Survey (NHANES), using measured heights and weights, indicate that an estimated 66 percent of US adults are either overweight or obese, as shown in Figure 1.[5]

In addition, the prevalence of obese children and adolescents in the US has also increased significantly over the last several years. It is estimated that the prevalence of obese children and adolescents has increased by 50 to 60 percent in a single generation and that approximately two million children suffer from extreme obesity today.[17] Data from NHANES in Figure 2 depicts the national increase in overweight children and adolescents from 1971 to 2004, where overweight is defined as those children whose BMI is greater than the 95th percentile for age. As you can see, all age groups had a significant increase in percentage of overweight children. For example, there was an increase in overweight adolescents ages 12 to 19 from 6.1 percent in 1974 to 17.4 percent in 2004.

The NHANES surveys also found an increase of overweight boys among all ethnic groups from 1988 to 2004. However, the ethnic group with more overweight children and adolescent boys in 2004 was the non-Hispanic white boy, of which 19.1 percent were overweight in 2004. Similarly, there was a significant increase in obesity among all ethnic groups for adolescent girls between 1988 and 2004, but the highest prevalence in 2004 was for non-Hispanic black girls, with an incidence of 25.4 percent.

In an effort to decrease associated health problems and decrease the incidence of premature mortality, there has also been a rise in bariatric procedures performed for adolescents over the past few years. Inge found a threefold increase in bariatric case volumes for adolescents from 2000 to 2003,[6] and Tsai reported 2,744 bariatric procedures performed on adolescents between 1996 and 2003, encompassing approximately 0.7 percent of total bariatric procedures performed that year.[7] Tsai found that, in 2003, 69.9 percent of the adolescents undergoing bariatric surgery were female, 87.1 percent of the cases were Roux-en-Y gastric bypass, and 81.4 percent had a private payer source. Sugerman’s 2003 study reviewed 33 bariatric surgery cases over a 20-year period, in patients between the ages of 12 and 18, with a mean BMI of 52, where 28 underwent a gastric bypass, most maintained weight loss after 14 years, and most comorbid conditions resolved at one year.[16] Other studies include Collins and Shauer’s retrospective study from 1999–2005, with 11 patients less than 18 years old, all of which underwent laparoscopic Roux-en-Y gastric bypass, where 70 percent of preoperative comorbidities improved or resolved postoperatively. They also performed quality of life surveys, which showed improved self esteem, social functioning, and productivity in school or workplace.[17]

It is difficult to place an economic cost on many consequences of morbid obesity. Several studies have shown that obese adolescents tend to have higher high school dropout rates, less marriage, and higher rates of household poverty compared to their non-overweight peers. These social issues not only permeate the lives of obese children and adolescents, but also will burden them throughout their entire lives. Some of these issues include discrimination at work, which may explain lower wages, inability to find a love companion, and overall poor quality of life. The Medical Outcomes Study Short-Form Health Survey evaluated aspects such as physical functioning, social functioning, mental health, and pain and found obese adults score poorly in all these areas.[18] Therefore, treating obesity has become not only a major healthcare priority, but also an important social concern.

Medical costs alone are significantly higher for obese individuals, especially when they have associated chronic medical conditions. Finkelstein found that obese and morbidly obese patients have 14- to 38-percent increase in physician visits when compared to their normal weight counterparts.[8] Thomson, et al., reported that obese individuals average 48-percent more inpatient days per year, and had 1.84 times the annual number of pharmacy dispenses, including six times the number of diabetic medication and 3.4 times the number of dispenses for cardiovascular medications.[8-9] Sturm used nationally representative data from the 1997–1998 Healthcare for Communities survey and found that obese adults have 36-percent higher annual medical and 77-percent higher medication (pharmacy) costs.[4] Similarly, Finkelstein’s study used data from the 1998 Medical Expenditure Panel Survey (MEPS) and Behavioral Risk Factor Surveillance System (BRFSS) survey and found an increase in annual medical costs in the order of 36.8 percent ($1486) for Medicare patients and 39.1 percent ($864) for Medicaid patients.[12] This boils down to roughly 5 to 7 percent of the total US annual healthcare expenditures, or $75 billion per year, $17 billion financed by Medicare, and $21 billion financed by Medicaid.[12]

Actually, there is also a remarkable increase in non-medical expenditures in the obese population. A notable component of these, which has extensively been studied, is absenteeism. Tucker and Friedman reported that obese employees are 1.74 times more likely to have seven or more absences due to illness during a six-month period than their lean counterparts.[8-10] Finkelstein found that an obese male employee costs approximately $670 more annually, and obese females cost an average of $1,200 more annually than their normal weight counterparts.[8] Thomson, et al., showed that obesity-attributable absenteeism cost employers about $2.4 billion in 1998.[8-9] Along the same lines, Sturm’s study showed that obesity-related healthcare costs exceed those related to smoking and problem drinking.[4]

In addition, a large portion of disability claims are secondary to obesity related conditions. One of the largest US disability carriers, Unum Provident, reported a 10-fold increase in the incidence of obesity-related disability claims. Their database shows that the average annual healthcare cost for a disabled obese individual is $51,023 ($30,567 medical + $8,720 disability payments + $11, 736 morbid medical costs).[11] Also, several studies have looked at the impact of obesity on occupational choice and wages. These studies have found that there is a higher incidence of obese individuals, particularly white obese women, who have relatively low-paying occupations, are less likely to obtain managerial or professional positions, and have higher rates of poverty when compared to same age normal weight females.[8,13-15] Cawley reported that an increase in weight of two standard deviations (roughly 65 pounds) is associated with a seven-percent decrease in wages of white women.[15] Clearly, the economic ramifications of obesity are numerous and have permeated all layers of society.

As stated earlier, bariatric surgery is a very viable option for obese individuals who have failed at non-operative means of weight loss. According to the 1991 National Institute of Health Consensus Statement, indications for bariatric surgery include those patients who have a BMI greater than 40, or greater than 35 with serious comorbid conditions.[19] In children and adolescents, the same indications hold true; however, they also need to have achieved complete psychological maturity, obtained 95 percent of their estimated adult stature, participate in the decision making, and have a general understanding of the procedure and the change in lifestyle associated with it. The improvements in quality of life, overall health, and mortality have already been discussed. More specifically, we will now turn our attention to the financial aspects of bariatric surgery.

Approximately 102,794 bariatric surgeries were performed in 2003, and it is estimated that by 2010, 218,000 operations will be performed.[20] Even though the length of stay, mortality, and complication rates for bariatric surgery have all decreased, the cost of bariatric surgery is steadily rising. The mean cost per bariatric operation for all payers increased 21 percent from $12,872 in 1998 to $15, 533 in 2003.[21] It is interesting to note that 80 to 90 percent of all bariatric cases performed are the gastric bypass, done both open and laparoscopically, and that the laparoscopic approach seems to be more cost effective. Paxton, et al., reported an average total cost of laparoscopic RYGB in the $17,660 range, compared with the higher cost of the open gastric bypass averaging $20,443.[22] Other studies had similar results, such as Livingston’s, in which he found laparoscopic adjustable gastric band to be the most expensive ($25,355) and laparoscopic gastric bypass to be the most economical ($19, 794), even when compared to the open approach ($22,313).[23]

Several researchers have studied the cost-effectiveness of weight loss surgery in the Unites States and other countries. In the US, cost-effectiveness analyses (CEA) have shown that weight loss surgery has provided net savings in the order of $35,000 per quality adjusted life year (QALY) for the gastric bypass procedure.[24] Craig, et al., showed that gastric bypass is more cost effective for women than for men, for individuals with a BMI greater than 40, and for younger individuals.[24]

Similarly, Clegg’s study out of the United Kingdom reported that in comparison with nonsurgical management of obesity, weight loss operations were indeed cost effective at £11,000 per QALY.[26] Likewise, Snow’s study evaluated the cost of gastric bypass with regards to savings in medications after the surgery. He found that approximately $240,566 were saved per year by patients undergoing gastric bypass.[25] Improvement or elimination of comorbid conditions, decreased requirement for medications of chronic disease, such as diabetes and hypertension, and increase in productivity are all considered in the cost effectiveness analysis of weight loss surgery.


To sum up, obesity is a major health, social, and financial issue permeating all layers of society in the US and abroad. This disease is not exclusive to adults and has similar—if not worse—implications in children and adolescents. Weight loss surgery is a viable and effective alternative and has been shown to improve quality of life, decrease morbidity and mortality, and decrease overall health costs to individuals and their employers. We should make it our goal to increase awareness of this major health and socioeconomic problem, and to promulgate the extensive benefits of weight loss surgery.

1. The Endocrine Society and The Hormone Foundation. Obesity in America. Available at: Accessed January 11, 2006.
2. Buchwald H, Avidor Y, Braunwald E, et al. Bariatric surgery: A systematic review and meta-analysis. JAMA 2004;292(14):1724–37.
3. Christou NV, Sampalis JS, Lieberman M, et al. Surgery decreases long-term mortality, morbidity, and healthcare use in morbidly obese patients. Ann Surg 2004;240:416–23.
4. Sturm R. The effects of obesity, smoking, and drinking on medical problems and costs. Health Affairs 2002;21(2):245–53.
5. Centers for Disease Control and Prevention. National Health and Nutrition Examination Survey (NHANES). Available at: Accessed May 5, 2007.
6. Inge TH, Xanthakos SA, Zeller MH. Bariatric Surgery for pediatric extreme obesity: now or later? Int J Obes 2007;31(1):1–14.
7. Tsai WS, Inge TH, Burd RS. Arch Ped Adolesc Medicine 2007;161(3):217–21.
8. Finkelstein EA, Ruhm CJ, Kosa KM, Economic causes and consequences of obesity. Annu Rev Public Health 2005;26:239–57.
9. Thomson D, Edelsberg J, Kinsey KL, Oster G. Estimated economic costs of obesity to US business. Am J Health Promot 1998;13(2):120–7.
10. Tucker LA, Friedman GM. Obesity and absenteeism: An epidemiologic study of 10,825 employed adults. Am J Health Promot 1998;12(3):202–7.
11. AON Risk Management, Reinsurance, Human Capital Consulting. Bariatric Surgery Policy guidance page. Available at: Accessed May 5, 2007.
12. Finkelstein EA, Fiebelkorn IC, Wang G. State-level estimates of annual medical expenditures attributable to obesity. Obes Research 2004;12:18–24.
13. Pagan JA, Davila A. Obesity, occupational attainment, and earnings. Soc Sci Q 1997;78(3):756–70.
14. Averett S, Korenman S. Black-white differences in social and economic consequenses of obesity. Int J Obes 1999;23:166–73.
15. Cawley J. 2000 National Bureau of Economic Research. Body Weight and Women’s Labor Market Outcomes: Paper No. 7841. Available at: Accessed July 10, 2007.
16. Sugerman HJ, Sugerman EL, DeMaria EJ, et al. Bariatric surgery for severely obese adolescents. J Gastrointest Surg 2003;7(1):102–7.
17. Collins J, Mattar S, Qureshi F, et al. Initial outcomes of laparoscopic Roux-en-Y gastic bypass in morbidly obese adolescents. Surg Obes Relat Dis 2007;3(2):147–52.
18. Martin LF, White S, Lindstrom W Jr. Cost-benefit analysis for the treatment of severe obesity. World J Surg 1998;22:1008–17.
19. Gastrointestinal surgery for severe obesity. Proceedings of a National Institutes of Health Consensus Development Conference. March 25–27, 1991, Bethesda, MD. Am J Clin Nutr 1992; 55(2 Suppl):487S–619S.
20. Santry HP, Gillen DL, Lauderdale DS. Trends on bariatric surgical procedures. JAMA 2005;294:1909–17.
21. US Department of Health and Human Services. Healthcare Cost and Utilization Project (HCUP) page. Available at: Accessed May 5, 2007.
22. Paxton JH, Mathews JB, The cost effectiveness of laparoscopic versus open gastric bypass surgery. Obes Surg 2005;15:24–34.
23. Livingston EH. Hospital costs associated with bariatric procedures in the United States. Am J Surgery 2005;190:816–20.
24. Craig DM, Tseng DS. Cost-effectiveness of gastric bypass for sever obesity. Am J Med 2002;113:491–8.
25. Snow LL, Weinstein LS, Hannon JK, et al. The effect of Roux-en-Y gastric bypass on prescription drug costs. Obes Surg 2004;14:1031–5.
26. Clegg A, Colquitt J, Sidhu M, et. Al. Clinical and cost-effectiveness of surgery for morbid obesity: A systematic review and economic evaluation. Int J Obes Rel Metab Disord 2003;27:1167–77.

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