Implant Prices are Main Cost Driver in Joint Replacements

Orthopaedic surgeons have long been aware of the role that implant prices play in the total cost of care for arthroplasty procedures, but methodical breakdowns of implant costs in relation to the cost of other aspects of care have generally been lacking. In the March 4, 2020 issue of The Journal, Carducci et al. detail the impact of implant costs on the total cost of care in a study of 6 lower- and upper-extremity arthroplasty types performed at a single, high-volume orthopaedic specialty hospital.

Using a uniform method called time-driven activity-based costing, the authors calculated the total costs of >22,200 inpatient primary total joint arthroplasties, and then broke down those total costs by categories, including implant price and personnel costs. It was no surprise that, as a percentage of total cost, implant costs were highest for low-volume surgeries (as high as 65% for total ankle arthroplasty) and lowest for high-volume procedures (e.g., 40% for total knee arthroplasty). Nevertheless, across the board, implant price was the most expensive component of total cost.

Implant prices are individually negotiated between a hospital and an implant supplier and are usually protected by nondisclosure agreements, so the data from this investigation may not match up with data from any other institution. Unfortunately, the future of implant-cost research will be tied to the complex issue of return-on-investment for implant-manufacturer stockholders as it relates to negotiations with individual hospitals and health systems.

The profound impact of implant price on the total cost of all the joint arthroplasties studied by Carducci et al. also begs the questions as to how “generic” implants (those not manufactured by the major orthopaedic producers) will ultimately influence the market—and whether “branded” implants, with their 30% to 50% markups, provide any functional benefit for patients. We will need further well-designed research to address those questions.

Marc Swiontkowski, MD
JBJS Editor-in-Chief

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One response to “Implant Prices are Main Cost Driver in Joint Replacements”

  1. Sudheer Reddy says :

    Dear Dr. Swiontkowski,

    Thank you very much for highlighting this article as it illustrates the effect of implant cost on the overall cost of care for elective arthroplasty. In particular, with low-volume, high-cost procedures such as total ankle arthroplasty, it can also be a cost-prohibitive procedure for smaller institutions. We performed a comparative study that analyzed the utilization of total ankle arthroplasty across institutions which demonstrated that implant cost accounted for 70% of the total all-payer cost of the procedure (Reddy et al. Assessing the Utilization of Total Ankle Replacement in the United States Foot Ankle Int 38(6), pp. 641-649). It would be interesting to see if “generic” or cheaper implants would provide the same clinical benefit at a reduced cost and definitely deserves further investigation.

    Like

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