Implant Costs – A Health Care Secret

How much does a new hip cost? The doctors who implant them do not know, writes Jenny Gold in Kaiser Health News. According to a survey of 503 physicians at seven major academic medical centers published this week in Health Affairs, they were able to correctly estimate the cost of a device only 21% of the time. Their estimates ranged from 1.8% of the actual price to 24.6 times the cost. Guesses within 20% of the actual cost were ranked as correct.

The survey found that residents were even worse than surgeons at estimating costs. Residents were correct only 17% of the time. Gold reported that the researchers could not release the actual costs of the implant devices because they had signed nondisclosure agreements with the hospitals.

According to Gold, Medicare spends about $20 billion each year on implantable medical devices—nearly half of it for orthopedic procedures. As the population ages that number is only going to go up, which will have a bigger and bigger impact on the nation’s healthcare spending.

“In orthopedic surgery, we’re never told how much things cost. We never see the cost displayed anywhere, and even if you were interested, there’s no great way to find it, ” said Kanu Okike, M.D., lead author of the Health Affairs study and an orthopedic surgeon at Kaiser Permanente Moanalua Medical Center in Honolulu

As Gold explained, “health care costs are not transparent, even for the surgeons. Each hospital system negotiates its own prices with a device manufacturer and signs a nondisclosure form, promising not to share the details of those prices with anyone else.” That’s because “medical device manufacturers strive to keep their prices confidential so that they can sell the same implant at a different price to different health care institutions, ” wrote the study authors.

The hardware that is implanted in knee replacement surgery can cost anywhere from $1, 797. to $12, 093, according to Okike who says that there is little evidence that one device is any better than another for the patient.

Kevin J. Bozic, M.D., an orthopedic surgeon at the University of California San Francisco, studies the cost of medical devices. He says that hospitals do not tend to pressure doctors to use cheaper devices because orthopedic surgeons are big moneymakers. “They don’t want to offend the doctors. They cater to them however they can, which includes not telling them which devices to use, ” he says.

While not disagreeing, Okike says, “At the root of it, the biggest problem is the lack of price transparency across the industry.” He believes that device manufacturers will not be in a hurry to change that without some sort of pressure.