In that purchasing environment, list prices for the knee implant device “skyrocketed in a little over a decade (1998-2011)—on average, the list price grew nearly 300 percent,” Premier said. Researchers in another study cited by Premier found that “more than 90 percent of variance was related to both hospital characteristics (purchasing process, etc.) and variance within the hospitals (surgeon preference and practices, etc.) for knee and hip implants,” not patient needs. As a result, prices paid by health care organizations for knee implant devices varied as much in the period 2015 to May 2017 as $1,500 from lowest to highest, and for shoulder implants, $1,700—just for the device itself.
Premier said (as did the OHS white paper and the 2016 Advisory Board study) that the solution is not for hospital management to simply snatch away purchasing decisions from surgeons, but for management, the purchasing department, and a committee of surgeons to band together and stare down the vendor as a group. Premier said it has a database of actual prices paid by 1,100+ member health care organizations to advise its members on what to pay.
What Is the ‘Real’ Cost of a Total Knee Arthroplasty?
The August 21 Wall Street Journalarticle says that after raising its price for a TKA an average of 3% per year for nearly a decade, the Gundersen Health System hospital in La Crosse, Wisconsin, had a list price for a TKA of more than $50,000 by 2016 (including the surgeon and anesthesiologist’s fees)—but the organization had no idea what a TKA actually cost. It charged that amount because it could, the article said.
Then, feeling pressure from Medicare and elsewhere, Gundersen decided to find out what a TKA really cost.
“During an 18-month review, an efficiency expert trailed doctors and nurses to record every minute of activity and note instruments, resources and medicines used. The hospital tallied the time nurses spent wheeling around VCR carts, a mismatch of available postsurgery beds, unnecessarily costly bone cement and delays dispatching physical therapists to get patients moving,” wrote the Journal reporter, Melanie Evans.
The average cost turned out to be $10,550 “at most, including the physicians,” Ms. Evans wrote.
Just as Gundersen was winding up its report, an organization called The Alliance, representing employers who pay for employee health care, showed up with an ultimatum: reduce the price of TKAs, or its member companies would take their TKA business elsewhere. They negotiated a price cut. Gundersen declined to disclose the size of the price reduction, but a representative of The Alliance said told Ms. Evans that it expected to save more than 30% off the list price for TKAs.
An excerpt from The Advisory Board’s 2016 paper, titled, “Key Considerations for Succeeding under Joint Replacement Bundled Payment” is available to anyone online. The full paper is available only to members of the Advisory Board’s Service Line Strategy Advisor.
As an orthopedic implant representative for better than 30 years, I feel it necessary to reply to the above study, specifically; The Cost of Chewing the Fat with Sales People. After listing all the many functions the company representative performs, and then attempting to eliminate that one person, to me makes no sense. What appears to be completely ignored, is; most, if not all company reps are well trained professionals, providing an invaluable service to not only the surgeon, but also the hospital staff, whether it be in the operating room, central sterile supply, or wherever they are needed. Its then stated that the surgical techs, whom I’ve found to be excellent, are assigned some of the reps tasks. Its important to know; what training, and by whom? Most likely, not the in depth training provided by the implant companies to their reps, but I could be wrong, I believe this to be a serious omission. Now, I’m fully aware of the need to look at all costs associated with joint replacement, however in my opinion,value needs to be part of the equation also.