How To Deal With The Booming Costs Of Hip & Knee Replacements - Medicare Bill Could Hit $50 Billion By 2030

Main Category: Bones / Orthopaedics
Also Included In: Medicare / Medicaid / SCHIP
Article Date: 25 Nov 2008 - 2:00 PDT

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Most of us know someone who has had a hip or knee replaced. This type of surgery can be life-altering, creating major improvements in the person's quality of life. However, with the number of these procedures projected to increase to 4.5 million by the year 2030, payment for all of these surgeries could be a big problem for the American health care system.

Hip and knee replacements are two of the most commonly performed surgeries in the United States. Costs reached $11 billion for hospitals in 2004. Medicare's bill could be close to $50 billion by 2030. As people live longer, more patients will need second surgeries to replace worn-out implants.

Much of the increased costs for the procedures can be attributed to the actual implant materials, according to academic experts from Arizona and California who are recommending ways of preventing potential problems for patients and medical organizations caused by rising implant costs.

"There are a lot of players involved in choosing which materials to use, such as hospitals, purchasers, patients and physicians, and they are frequently not on the same page, which needs to change," says Professor Eugene Schneller of the School of Health Management and Policy at Arizona State University's W. P. Carey School of Business.

Schneller and Research Associate Natalia Wilson are the co-directors of the Health Sector Supply Chain Research Consortium, a collaborative effort between the school and industry partners, including hospitals, group purchasing organizations, IT solutions companies and distributors. The results of consortium-funded research on hip and knee replacement costs by Schneller, Wilson, Professor Kathleen Montgomery of the University of California, Riverside and Associate Professor Kevin Bozic of the University of California, San Francisco appear in the November/December edition of Health Affairs.

The researchers found that physicians tend to select medical devices and equipment for their patients based on familiarity with and loyalty to certain products, as well as their relationships with suppliers. Suppliers focus on offering physicians product choices, rather than thinking of the hospitals from which the payment will eventually come. Hospitals often meet resistance when they try to get surgeons involved in managing medical device inventory and costs because the surgeons feel the efforts are primarily based on saving money, not helping patients.

"One of the biggest challenges is getting all of the key players to come to the table to address these issues as a team," says Montgomery.

The authors say several things could be done to help deal with these issues:

1. A centralized council could perform systematic reviews of existing research on the subject, assess the technologies, focus on clinical evidence and cost-effectiveness, and provide information in an easily accessible database.

2. A national joint registry of information from hip and knee replacement surgeries across the country could be kept in a central location in the U.S. for use by hospitals, physicians and others.

3. A national implant price registry could allow hospitals, payers and patients to make better informed, value-based decisions.

4. Increased financial incentives could be offered, in order to encourage more collaboration between hospitals, physicians and medical device manufacturers in evaluating the comparative effectiveness of implants.

"There is great need for comparing the effectiveness of different hip and knee implants and for long-term data from a national joint registry," says Wilson. "Sweden already has a very effective national joint registry that has resulted in significant cost savings and influence on choice. In order to stem costs, we also need more price transparency."

"Hip and knee replacement surgery will continue to provide valuable improvements in quality of life for patients who suffer from disabling conditions of the hip and knee," says Bozic. "However, it is imperative that collaborative efforts be made to improve the availability and transparency of cost and quality data to sustain the long-term financial viability of these procedures."

To read the full article "Hip and Knee Implants: Current Trends and Policy Considerations," go to http://content.healthaffairs.org/cgi/content/full/27/6/1587.

W. P. Carey School of Business

The W. P. Carey School of Business at Arizona State University is one of the top-ranked and largest business schools sin the United States. The school is internationally regarded for its research productivity and its distinguished faculty members, including a Nobel Prize winner. Students come from 90 countries and include more than 60 National Merit Scholars. For more information please visit http://www.wpcarey.asu.edu and http://knowledge.wpcarey.asu.edu/.

W. P. Carey School of Business