Orthopedics

The Economics of New Age Arthroplasty: Can We Afford It?

Thomas P. Sculco, MD

  • Orthopedics. 2010;33(9)
  • Posted September 1, 2010

Abstract

New technology in joint replacement design and materials adds cost that must be documented by improved outcomes. This is not always the case as the recent metal/metal data has shown. The current economics of arthroplasty have put increasing financial pressure on hospitals and will progress under new health care legislation. New technology must be cost-effective and this will be increasingly difficult in an era of outstanding long-term results with current designs. Cost may necessitate less expensive alternatives, eg, generic implants, in arthroplasty patients.

Joint replacement surgery has evolved over the past 4 decades into a highly successful surgical procedure. Earlier designs and materials that demonstrated inferior functional and long-term results have disappeared in a Darwinian fashion. Through this evolutionary process many of the current designs have proven efficacy and durability. Current outcome data indicates that hip and knee designs demonstrate 90% to 95% success rates at 15-year follow-up. Technologic advances are necessary to improve implant design and materials, however, only in an environment of reduced reimbursement to hospitals can the increased cost be justified.

The rationale that technology in medicine would be expensive at the outset yet be cost-effective eventually has in many areas not been the case. Currently approximately one-half of the rapid increase in health care costs in relation to the gross national product may be attributed to technology. It is now common knowledge among health care economists that if the cost of health care is to be controlled, the growth of technology must be constrained.

Increasingly as new technology emerges, the question will be: what is the cost-benefit analysis? A new era of comparative effectiveness research is being launched and will become predominant in medicine and arthroplasty in the future. What is the newest may not always be the best. There is a need for comparative effectiveness studies of emerging and existing technology so that the new can be priced in a way that reflects its incremental value. New technology must demonstrate its benefit to justify its cost, often in arthroplasty there is little data available to document these better outcomes.

The high-flex knee designs are an example of implant modification adding significant cost to the prosthesis. This design is intended to provide greater knee motion for patients, however, many patient-related variables impact on knee motion and there is little substantiated evidence that these implants produce knee flexion, which is superior to conventional designs. The gender-specific knee design, despite increased cost, has not produced better outcomes.

Computer-assisted surgery is a technology that has struggled to gain a foothold in arthroplasty. Computer-assisted navigation for joint replacement adds cost to the procedure both for equipment and added operating time. If these systems, particularly in hip replacement, improve acetabular orientation and leg-length equality, then the cost may be justified but this has not been demonstrated to date. Additionally, current systems require multiple pin insertion for tracking devices that may increase morbidity. Navigation system cost must be reduced and the tracking mechanisms must be simplified to justify generalized use.

Robotic surgery is another example of expensive technology with little evidence-based literature to support its use. Robotic systems can cost from $750,000 and currently add time to the procedure.

In the future there will be a place for these navigation-assisted surgical devices and the technology will improve and be more cost effective and user friendly. In the end it may improve the accuracy in low-volume surgeons and reduce outlier implant results.

Implant costs can be 30% to 40% of hospital costs for a joint replacement patient and new bearing surfaces and designs always come with significant increase in price. Only minor changes…

Abstract

New technology in joint replacement design and materials adds cost that must be documented by improved outcomes. This is not always the case as the recent metal/metal data has shown. The current economics of arthroplasty have put increasing financial pressure on hospitals and will progress under new health care legislation. New technology must be cost-effective and this will be increasingly difficult in an era of outstanding long-term results with current designs. Cost may necessitate less expensive alternatives, eg, generic implants, in arthroplasty patients.

Joint replacement surgery has evolved over the past 4 decades into a highly successful surgical procedure. Earlier designs and materials that demonstrated inferior functional and long-term results have disappeared in a Darwinian fashion. Through this evolutionary process many of the current designs have proven efficacy and durability. Current outcome data indicates that hip and knee designs demonstrate 90% to 95% success rates at 15-year follow-up. Technologic advances are necessary to improve implant design and materials, however, only in an environment of reduced reimbursement to hospitals can the increased cost be justified.

The rationale that technology in medicine would be expensive at the outset yet be cost-effective eventually has in many areas not been the case. Currently approximately one-half of the rapid increase in health care costs in relation to the gross national product may be attributed to technology. It is now common knowledge among health care economists that if the cost of health care is to be controlled, the growth of technology must be constrained.

Increasingly as new technology emerges, the question will be: what is the cost-benefit analysis? A new era of comparative effectiveness research is being launched and will become predominant in medicine and arthroplasty in the future. What is the newest may not always be the best. There is a need for comparative effectiveness studies of emerging and existing technology so that the new can be priced in a way that reflects its incremental value. New technology must demonstrate its benefit to justify its cost, often in arthroplasty there is little data available to document these better outcomes.

The high-flex knee designs are an example of implant modification adding significant cost to the prosthesis. This design is intended to provide greater knee motion for patients, however, many patient-related variables impact on knee motion and there is little substantiated evidence that these implants produce knee flexion, which is superior to conventional designs. The gender-specific knee design, despite increased cost, has not produced better outcomes.

Computer-assisted surgery is a technology that has struggled to gain a foothold in arthroplasty. Computer-assisted navigation for joint replacement adds cost to the procedure both for equipment and added operating time. If these systems, particularly in hip replacement, improve acetabular orientation and leg-length equality, then the cost may be justified but this has not been demonstrated to date. Additionally, current systems require multiple pin insertion for tracking devices that may increase morbidity. Navigation system cost must be reduced and the tracking mechanisms must be simplified to justify generalized use.

Robotic surgery is another example of expensive technology with little evidence-based literature to support its use. Robotic systems can cost from $750,000 and currently add time to the procedure.

In the future there will be a place for these navigation-assisted surgical devices and the technology will improve and be more cost effective and user friendly. In the end it may improve the accuracy in low-volume surgeons and reduce outlier implant results.

Implant costs can be 30% to 40% of hospital costs for a joint replacement patient and new bearing surfaces and designs always come with significant increase in price. Only minor changes in design will generate cost increase of up to 25% without evidence of improved outcome. With current health care reform policy, reimbursement to hospitals will continue to decline and cost of new technology will not be sustainable in most hospitals with current profit margins of 1% to 2%. Large implant manufacturers have documented profit margins in the order of 15% to 25% and reduction in implant costs with or without new technologies must occur for the survival of many hospitals. If the implant industry is to accomplish this, there may be a place for their use in the younger patient with greater life expectancy.

In a recent study by Bozic et al,1 the cost-effectiveness of new technologies was evaluated. Based on the authors’ findings for an alternative bearing with an incremental cost of $2000 to be cost saving for a 50-year-old there would have to be a 19% reduction in 20-year failure rates. The likelihood of cost savings for these alternate bearings in patients 63 years or older is highly unlikely at current costs. Newer biomaterials (metal/metal, ceramic/ceramic, highly cross-linked polyethylene) also have limited outcome analysis in patients beyond short- to mid-term follow-up evaluation and all of these technologies add significant cost to the implant. With diminishing reimbursement, careful analysis of use of these newer technologies must be weighed if hospitals are to maintain economic viability.

The pharmaceutical, airline, and food industries have all moved toward generic products that are less costly and this will be the trend in the future in prosthetic implants as well. Newer technologies must demonstrate their efficacy in long-term follow-up and be clearly superior to conventional implants. This is not always the case as new data on metal-metal implants is demonstrating. Change is not always progress.

Reference

  1. Bozic KJ, Morshed S, Silverstein MD, Rubash HE, Kahn JG. Use of cost effectiveness analysis to evaluate new technologies in orthopaedics. J Bone Joint Surg Am. 2006; 88(4):706-713.

Author

Dr Sculco is from the Hospital for Special Surgery, New York, New York.

Dr Sculco receives royalties from Exactech.

Presented at Current Concepts in Joint Replacement 2009 Winter Meeting; December 9-12, 2009; Orlando, Florida.

Correspondence should be addressed to: Thomas P. Sculco, MD, Hospital for Special Surgery, 535 E 70th St, New York, NY 10021 (sculcot@hss.edu).

doi: 10.3928/01477447-20100722-46

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