Top hospitals and orthopedic surgeons are coming together to sell joint replacements and similar surgeries for a set price to regional and national buyers.
So far, 10 orthopedic institutes, which marry hospitals and physicians, have joined the effort, known as Orthopaedic Network Enterprises.
By the end of this month, the new network will try to pick from the institutes' practices the ones that yield the highest quality and lowest costs. By June, it plans to offer packaged prices for joint replacements and spinal surgeries, said Kerry Hicks, senior vice president of LBA Health Care Management Products, an Englewood, Colo.-based firm that's organizing the network.
Regional variations within a set range of prices will keep the network out of antitrust troubles, Mr. Hicks said. It will negotiate with members separately the actual price in the range to be offered all payers.
Members could chop 25% to 40% off the cost of a $19,000 hip replacement, for example, by performing more procedures, sharing quality data and commanding better prices from implant makers, he said. U.S. physicians perform more than 500,000 joint replacements annually.
Last spring, LBA helped form a similar network for cardiac care, another high-cost specialty. The company withdrew from the Atlanta-based National Cardiac Network shortly afterward because of "differences in business policy," Mr. Hicks said.
The cardiac network won antitrust clearance last September when the U.S. Justice Department said it fell within newly established "safety zones" for provider business activities (Oct. 4, 1993, p. 6).
Executives expected to sign the network's first contract by late last week, said Erik Dasbach, its director of research and information systems. About 700 cardiac physicians and 35 hospitals and groups make up the network.
The orthopedic network eventually could contain as many as 100 institutes, Mr. Hicks said.
It now includes 500-bed Georgetown University Hospital in Washington, 1,117-bed Methodist Hospital in Houston, 200-bed New England Baptist Hospital in Boston, 714-bed Pennsylvania Hospital in Philadelphia, 250-bed Rose Medical Center in Denver and 610-bed University of California at Los Angeles Medical Center.
It also has agreements with hospitals in Florida, Indiana, New York and Virginia, Mr. Hicks said. He declined to name the facilities because the agreements were not finalized.
Members will put up about $30,000 each this year for the cost of network services, he said.