Published: 12 May 2014 09:15 PM
Updated: 12 May 2014 09:44 PM FiDA highlight
WASHINGTON — This winter, I had my knees replaced. I used a surgeon and a hospital in my neighborhood of Alexandria, Va., not far from where I work. The surgery and rehab are going fine. The lessons in health care economics are becoming strange.
For each knee, the bills (hospital, surgeon, anesthesiologist) came to roughly $32,000. Michael Toomey, president of Compass Care Engineering in Dallas, says the average in the Dallas area is between $42,000 and $43,000.
My new mechanical knees were the most expensive items in the bills. The hospital wanted $16,097.05 for each of them. My insurance agreed to pay $10,982.72 apiece.
These are Sigma System knees, size 5, made by DePuy Orthopaedics of Warsaw, Ind. DePuy is part of Johnson & Johnson.
The knees are made of cobalt, chrome and polyethylene. There’s a buckle-like piece that fits over the knee tip of my thigh bone. There’s a piece that looks like a peg with a circle on it drilled into my shin bone. Between them is a plastic disc. On the back of the knee cap, there’s a metal dome.
My surgeon chose these knees. The hospital bought them. Insurance (and my out-of-pocket max of $3,000) paid for them.
So, let’s see, if my knees were a car, my mechanic would choose my next automobile. A garage would buy it, and add its own markup. My employer (which is where I get health insurance) would pay for most of it, using an insurance administrator to bargain over the price.
Survey of surgeons
This is standard practice in the medical world. Device manufacturers will pitch their products to surgeons, but the surgeons are often in the dark or heedless of the cost. A survey cited in the January issue of Health Affairs found that 81 percent of orthopedic surgeons could not accurately guess the cost of these devices. And American surgeons replace about 720,000 knees a year.
Baylor Scott & White Health is using a different approach. The surgeons and the supply people meet to talk openly about prices and quality. They agree on a price the hospital system will pay. Medical device makers are then invited to meet or beat that price.
“Everybody can play, but you have to meet this capitated [maximum] price,” said Pam Bryant, Baylor Scott & White’s senior vice president for supply chain services.
Surgeons can choose among four or five key types, Bryant said.
Texas Health Resources also negotiates as a chain for its joint replacements. But here, the surgeons can choose what they like.
“While there is a great deal of similarity between devices, surgeons have definite preferences based upon training and their individual style of surgery — as well as the individual patient needs, including age, activity and other factors,” said John Gaida, THR’s senior vice president for supply chain management.
“Texas Health strives to make virtually all brands of hip and knee implants available to our surgeons so that the patient needs are always the primary consideration,” he said.
Across the country, surgeons are not clued in on the cost of medical devices often because the hospital can’t share that information. They typically sign a contract with the medical device company that forbids disclosure.
I know little about mechanical knees. My surgeon implants them all the time, so it makes sense to follow his guidance on what would suit me best and last longest.
But we didn’t go over a list of knees and manufacturers. My surgeon asked about my lifestyle, looked at my age and weight, and chose for me.
The hospital did the negotiating with DePuy. Did they get a good deal?
A 2012 Government Accountability Office report covering a small sample of hospitals found that one paid $5,200 for a knee replacement while another paid $9,500 for the same device.
There are several types of knees on the market. There’s a standard, fixed-bearing knee; a rotational knee that can handle more twists and turns; and a rotational/full flexion knee that allows for deep squats.
Prices seem to run between $2,000 and $16,000 for the device. So it turns out that my new knees (rotational) are pretty high-end. I hope they last a long time.
Follow Jim Landers on Twitter at @landersjim.