Industry Challenges Joint Replacement Pricing

Competition for joint replacements surgery is heating up. According to Chad Terhune, writing in the November 17 Los Angeles Times, some U.S. corporations are flying employees in need of hip or knee replacements around the country seeking out the better deals. Stephens Media, a publishing company, is sending its employees in need of surgery to hospitals that offer a low, fixed rate for surgery and also score high on measures of quality of care.

Terhune reports that the Kroger grocery firm has flown as many as 24 workers to hospitals around the country in search of lowered costs and improved care. He writes that, beginning in January, Wal-Mart Stores will offer employees surgeries at no cost at six selected major hospital systems within the U.S. and will throw in free travel and lodging.

These actions by business reflect the growing frustration of employers with the vastly different price tags hospitals assign to what have become routine operations. The fee-for-service medical model, in which doctors, hospitals, laboratories and pharmacists all send separate bills, is being challenged. “We want to stop paying by the widget in healthcare, ” Susan Ridgely, a senior policy analyst at Rand Corp., a nonprofit think tank in Santa Monica, told Terhune

At Kroger, employees may pay 10% out of pocket if they choose one of the company’s 19 select hospitals, compared to 25% to 50% out of pocket for other nearby medical centers, Terhune reported. To date, none of the Kroger patients who have traveled for surgery this year have experienced complications or been readmitted to the hospital, Theresa Monti, a company vice president for employee benefits, told Terhune. She said Kroger pays about $30, 000 on average for those knee and hip replacement surgeries which is 15% less than what it pays at other hospitals.