Orthopedic and cardiac care may not be the profit centers hospitals have traditionally believed them to be, according to a study presented at the Pursuit of Value for Medical Devices conference at the University of California at Irvine.
The study looked at implant-purchasing practices, payer mix, patient outcomes and cost per case for cardiac-, orthopedic- and spinal-implant surgeries at 11 hospitals in Orange County, Calif., and found wide variances in profitability, according to Barry Arbuckle, chairman of the California Hospital Association and a board member of the Integrated Healthcare Associationsponsors of the conference. Many hospitals thought they were doing well in the areas of cardiac care and orthopedics, but now realize over 50% of their reimbursement is accounted for by the cost of the device, Arbuckle said.
The study, conducted by James Robinson, a professor of health economics at the University of California at Berkeley, found dramatic differences in costs for the same device between the 11 hospitals, with one hospital paying $23,000 per case for a cardiac defibrillator implant and another paying as much as $30,000 for the same device.
The findings suggest hospitals need not only do a better job of controlling physician-preference purchasing, but that they also need to develop new approaches to cost control, Arbuckle said. One concept thats been floated is banning sales reps, whose commissions help drive up device pricing, he noted. -- by Shawn Rhea