“It's unacceptable that we make money when we have more complications,” said Virginia Mason's CEO Dr. Gary Kaplan.
Virginia Mason plans to cover the costs of avoidable, surgery-related complications if a patient undergoes all of his or her care, including diagnosis, surgery and rehabilitation at the hospital, and is covered by a bundled-service contract with a private insurer or employer. The timeframe for the warranty would be negotiated with the understanding that most complications occur within 90 days of the surgery, a hospital spokesman said. The warranty does not cover complications or revisions resulting from the failure of an implant itself.
Virginia Mason, which performs about 1,300 hip or knee surgeries each year, is known for the quality of its total joint replacement program. It's also part of a national network of hospitals that provide hip and knee replacements to employees of corporations such as Walmart and Lowe's. The medical center's current surgical complication rate for hip and knee replacements hovers around 3%, Kaplan said.
Adopting a retail tactic such as a warranty for healthcare has recently become part of the national discussion on reducing unnecessary costs and improving quality, led in part by an advocacy campaign to compel manufacturers to provide warranties on their implants.
Geisinger Health System, a four-hospital system based in Danville, Pa., was the first system in the nation to offer surgical warranties through its ProvenCare model. Geisinger starting providing warranties on elective cardiac surgery in 2006, and on Monday it plans to announce that its program has been expanded to cover the costs of hip fractures and total hip and knee replacements.
“By affixing evidenced-based protocols to all hip and knee surgeries, we are able to ensure the same high-quality care is delivered to every patient, every time,” Dr. Michael Suk, chairman of Geisinger's department of orthopaedic surgery, said in a statement.
Washington state, where Virginia Mason is based, also is considering requiring warranties for hip or knee replacements provided to Medicaid recipients and state employees.
About 719,000 knee replacements and 332,000 hip surgeries are performed each year in the U.S. That number is expected to increase as baby boomers age. Higher U.S. obesity rates also indicate that patients of all ages may begin to need new hips or knees.
Some patient advocates say that medical-device manufacturers should provide warranties on the implants they sell to hospitals. One manufacturer, Biomet, provides a lifetime warranty on its partial knee implant if a patient requires a revision surgery. The warranty doesn't include hospital costs, co-pays or other expenses.
Consumers Union, the policy and advocacy arm of Consumer Reports, launched a campaign last year to compel medical-device manufacturers to provide warranties on implants if their devices are defective.
About 12,000 people signed a petition submitted in August to the Federal Trade Commission, asking agency officials to consider the value of Biomet's warranty as they evaluate the proposed $13.3 billion merger between Biomet and Zimmer Holdings, another orthopedic manufacturer.
The recent high failure rates of metal-on-metal hip implants and the associated costs of revisions are a driving factor behind the push for manufacturers to provide warranties. The cost of a revision surgery for a patient who received a metal-on-metal hip is about $100,000. Consumers Union has reported that all major manufacturers of hip and knee implants have recalled a product in the last 10 years.
Follow Jaimy Lee on Twitter: @MHjlee