Joint-Replacement Devices a Societal Bargain

We read a lot about the costs of medical technology to patient care but a closer look reveals that medical technology prices in the United States have remained consistently low for 20 years. According to Jeffrey R. Binder, president and CEO of Biomet Inc. and a member of the board of directors at the Advanced Medical Technology Association, writing for the online publication Phily.com, medical technology prices have grown at about an average annual rate of 1%—half the rate of prices in the overall economy.

Binder writes that spending on advanced medical technology, as a percentage of national health expenditures, has also remained virtually constant from 1992 to 2010. Total joint-replacement devices are going down in price. From 2007 to 2011 the average inflation-adjusted price paid by hospitals for artificial hips declined by 23% and the cost for knee implant devices fell by 17%.

Binder refers to studies that have shown that Medicare patients receiving total hip or knee replacements have nearly half the risk of death after seven years compared with a matched group of osteoarthritis patients who had not received total joint replacements.

Binder quotes a study showing that, for the average patient, the direct costs of knee replacement surgery are offset by indirect savings from increased employment and earnings, fewer missed days at work, and lower disability payments. The result is a lifetime net benefit of nearly $19, 000 per patient. If applied across all U.S. knee recipients in 2009, the study estimated net lifetime societal savings of $12 billion just from treatment delivered in that year alone.

Younger patients generate even greater benefits. A total knee replacement in a 50-year-old patient will yield a net societal benefit of $69, 000 over 30 years.

The medical technology industry affects the broader economy. According to data from the Lewin Group, the industry employs more than 22, 000 people just in Pennsylvania—and supports an additional 57, 000 jobs in other sectors. All told, medical technology contributes more than $13 billion to Pennsylvania’s economy. The story is similar in New Jersey. Med tech supports more than 63, 000 Garden State jobs directly and indirectly and accounts for $12.6 billion in annual economic activity.