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Scientific Articles   |    
Variability in Costs Associated with Total Hip and Knee Replacement Implants
James C. Robinson, PhD, MPH1; Alexis Pozen, BA1; Samuel Tseng, PhD1; Kevin J. Bozic, MD, MBA2
1 University of California, Berkeley, Berkeley Center for Health Technology, 300 Lakeside Drive, Suite 1980, Oakland, CA 94612
2 UCSF Department of Orthopaedic Surgery and Philip R. Lee Institute for Health Policy Studies, 500 Parnassus, MU 320W, San Francisco, CA 94143-0728. E-mail address: kevin.bozic@ucsf.edu
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  • Disclosure statement for author(s): PDF

Investigation performed at the University of California, Berkeley, Berkeley, and the University of California, San Francisco, San Francisco, California

This article was chosen to appear electronically on August 8, 2012, in advance of publication in a regularly scheduled issue.

A commentary by Nitin B. Jain, MD, MSPH, is linked to the online version of this article at jbjs.org.



Disclosure: One or more of the authors received payments or services, either directly or indirectly (i.e., via his or her institution), from a third party in support of an aspect of this work. In addition, one or more of the authors, or his or her institution, has had a financial relationship, in the thirty-six months prior to submission of this work, with an entity in the biomedical arena that could be perceived to influence or have the potential to influence what is written in this work. No author has had any other relationships, or has engaged in any other activities, that could be perceived to influence or have the potential to influence what is written in this work. The complete Disclosures of Potential Conflicts of Interest submitted by authors are always provided with the online version of the article.

Copyright © 2012 by The Journal of Bone and Joint Surgery, Inc.
J Bone Joint Surg Am, 2012 Sep 19;94(18):1693-1698. doi: 10.2106/JBJS.K.00355
5 Recommendations (Recommend) | 3 Comments | Saved by 3 Users Save Case

Abstract

Background: 

Implant costs associated with total hip replacement and total knee replacement procedures account for a large share of total costs and reimbursements to hospitals. Federal policymakers are promoting episode-of-care payment and other value-based delivery and payment reforms in part to encourage physicians and hospitals to cooperate in managing costs for these and other procedures. The present study quantifies the patient, hospital, and market characteristics associated with variation in implant and total procedure costs for hip and knee arthroplasty.

Methods: 

Clinical, demographic, and economic data were collected on 10,155 unilateral primary total knee replacement procedures and 5013 unilateral primary total hip replacement procedures from sixty-one hospitals in 2008. Variation in implant costs per procedure was measured within and across hospitals. Multivariate statistical analyses were used to measure the association between patient and hospital characteristics and implant costs and total procedure costs.

Results: 

The average implant cost per case ranged from $1797 to $12,093 for total knee replacement procedures and from $2392 to $12,651 for total hip replacement procedures. For total knee replacement, 2.5% of total variation in device costs was attributable to patient characteristics and 61.0% was attributable to hospital characteristics; the remaining 36.5% of variance was attributable to within-hospital variation not due to patient or hospital characteristics. For total hip replacement, 4.4% of variance was attributed to patient characteristics, 36.1% was attributed to hospital characteristics, and 59.5% was attributed to within-hospital variation not due to patient or hospital characteristics.

Conclusions: 

There are substantial variations in total hip replacement and total knee replacement implant costs within and across hospitals after controlling for patient diagnoses and comorbidities. This variation is responsible for the majority of variation in the overall cost of total hip and knee replacement surgery.

Level of Evidence: 

Economic and decision analysis, Level III. See Instructions for Authors for a complete description of levels of evidence.

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    References

    Accreditation Statement
    These activities have been planned and implemented in accordance with the Essential Areas and policies of the Accreditation Council for Continuing Medical Education (ACCME) through the joint sponsorship of the American Academy of Orthopaedic Surgeons and The Journal of Bone and Joint Surgery, Inc. The American Academy of Orthopaedic Surgeons is accredited by the ACCME to provide continuing medical education for physicians.
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    James C. Robinson; Alexis Pozen; Samuel Tseng; Kevin J. Bozic
    Posted on December 07, 2012
    Calculations in Table I

    Table 1 shows the distributions of each of three measures: device cost, total surgical cost, and the ratio of device cost to total surgical cost. This is done for both knee and hip replacement surgery. To compute the distribution of the ratios, we first compute an individual device-cost-to-surgical-cost ratio for each individual procedure and then determine the distributions of these individually computed ratios. For example, in the last row on the Hip Replacement portion of the table, the maximum device cost is $12,651, the maximum surgical cost is $23,051 and the maximum ratio of device cost to surgical cost is 87.24%. The maximum device cost and maximum surgical cost do not refer to the same individual hip replacement procedure and thus the maximum ratio is not calculated as the ratio of the maximum device cost to the maximum surgical cost. The maximum ratio is rather the maximum in the distribution of individually computed ratios. Here, the maximum ratio comes from an individual case where the device cost was $12,209.81 and the total surgical cost was$13,996.18. In this individual case, the device cost is high in the distribution of device costs, but the total surgical cost is only slightly above the median in the distribution of total surgical costs. In other words, each ratio column in the table describes the distribution of the ratios, not the ratios of the distributions. We hope that this explanation helps to clarify the meaning of the ratio columns in the table.

    Jos Van Niekerk
    Posted on November 15, 2012
    The percentages in Table I look incorrect
    Morningside Clinic, Johannesburg, South Africa

    The article I found very interesting. However, when I got to their “TABLE I” I found that the arithmetic did not work out. If you take, as an example the median cost of a knee replacement, as 4857 and calculate it as a percentage of the total surgical cost of 11,660, this gives a percentage of 41.66% and not 43.47%. On some of the other lines the discrepancy is even greater. Is my calculator wrong or is there some other way this should be calculated? I await the authors' response with interest.

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