Healthcare Business News

Price for knee implants down 8%, ECRI price index shows

By Jaimy Lee
Posted: January 17, 2014 - 1:45 pm ET

Hospitals are paying about 8% less for knee implants as more healthcare providers push back against the high costs of physician preference items, the implantable medical devices that make up the largest chunk of a hospital's supply spend.

The most recent Modern Healthcare/ECRI Institute Technology Price Index found that the average price for the femoral component of knee implants is $2,354, which is 7.9% lower than it was a year ago.

The index looks at monthly and annual price data for about 30 supply and capital items purchased by hospitals and other providers, based on three-month rolling averages.

Increased pressure for hospitals to reduce overall costs has led more hospital supply-chain executives to partner with physicians and negotiate better prices on pricey devices such as knee implants and pacemakers.

“This is one of the reasons for the reductions in price over time in this particular category,” said Tim Browne, director of ECRI's PriceGuide Service.

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Traditionally, it has been challenging for hospitals to negotiate lower prices for these types of devices, in part because physicians have a preference for a particular product or manufacturer and are unaware of the costs. A recent study found that doctors usually have more information about clinical and safety data than pricing.

In addition, manufacturers often implement gag clauses that limit hospitals from sharing information about the prices of these devices, making the collection of pricing data for comparison difficult.

About 600,000 knee implant procedures are performed in the U.S. each year. That number is expected to rise as the baby boomer population gets older and an increasing number of younger patients get knee replacements.

Even if devicemakers are making less per unit, they stand to benefit from a significant rise in volume in the coming years. ECRI estimates that the number of knee implants is expected to grow 673% from 2005 to 2030. This projection is attributed in part to increases in revision surgeries because the lifespan of an implant is between 10 and 15 years.

Launches of new products or changes or upgrades in medical technology often drive up prices, and manufacturers have made few significant changes to knee implants.

“There hasn't been a strong upward push on price from innovation,” said Jeremy Suggs, engineering manager in ECRI's health devices group. “That has added to the steady decrease in price.”

Prices for the femoral component of knee implants range from about $1,000 to $4,000. A knee implant also includes the patellar and tibial components, as well as surgical instruments. The femoral component makes up the greatest spend of the total implant, Browne said.

Follow Jaimy Lee on Twitter: @MHjlee

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