Joint replacement surgery costs vary greatly between hospitals

A joint replacement surgery can cost as little as $5,000 or as much as $30,000 depending on the hospital, according to a new report.

The analysis, published Wednesday by Premier, found the cost of joint procedures vary significantly between hospitals because of differences in practice patterns and devices used.

According to the analysis, the overall median cost of total joint replacement surgery is $14,520, but 50% of cases cost between $12,000 and $17,900. The cost data came from Premier's database of 1,100 hospitals. The analysis included roughly 283,000 patient discharges at 869 hospitals from October 2015 to March 2017.

Premier found that the cost differences were the result of different implants hospitals used and how they performed the procedures.

Among 350 hospitals, the average cost of primary knee implants was $4,464. Yet, 50% of the hospitals paid between $4,066 and $5,609 on the devices. Further, the same group of hospitals paid an average of $5,252 for primary hip implants, but 50% of the hospitals paid between $4,759 and $6,463.

"When we work with a hospital system and facilities, there is significant disparity in pricing within and across vendors. There is a real opportunity there because devices make up a significant portion of the cost of the procedure," said Catherine Bakalar, vice president of operations and delivery at Premier.

According to the analysis, the providers could save $23.7 million on knee implants and $19.1 million on hip implants if they paid the same amount for implants as the top 25th percentile of hospitals.

Total joint replacement surgery is one of the most common procedures performed in the U.S. More than one million joint replacements are performed every year in the U.S., and by 2030 that number is expected to grow to more than 4 million.

Bakalar said hospitals can weed out physicians' use of expensive vendors by showing them how their costs compare to their peers.

"It does speak to their naturally competitive natures," said Robin Czajka, service line vice president of cost management at Premier.

Other areas that Premier found drove variation in performance were differences in anesthesia administration, operating room staffing and bone cement use among hospitals.

Premier found that even though local anesthesia is less expensive and has a lower risk of infection for patients compared to general anesthesia, only 22% of total joint patients receive local anesthesia. More than half — 52% — receive general anesthesia.

Patients usually aren't given the option to receive local anesthesia because doctors assume that patients don't want to be awake for procedures, Czajka said.

"We don't give patients credit — if they were given the opportunity to be awake, many would take it," she said.

Hospitals also struggle to have lean staffing in the OR. Premier found the highest-performing hospitals — those in the 25th percentile — spent about $2,000 on labor in the OR per procedure compared to the lower-performing hospitals — those in the 75th percentile — that spent more than $4,600 on operating room staff.

Czajka said she has visited ORs that have 10 people in the room, and others that have just three or four. "Hospitals get comfortable with what they are used to having," she said. "Hospitals have to sit down and see if they are doing the procedure in the most efficient way they can."

Hospitals could save money on bone cement, which is used to hold the implant against the bone, as well. Research shows that bone cement infused with antibiotics doesn't improve patient outcomes, and it costs 120% more per patient compared to bone cement without antibiotics.

It can be difficult for hospitals leaders to convince physicians to stop using the antibiotic-infused bone cement, Czajka admits.

"It's a hard sell for physicians in some cases. They are taking every possible precaution to prevent infections. However, if you look at the data, it doesn't support better outcomes, so when we are in there and speaking to physicians about increasing their use of non-impregnated bone cement, you have to bring in the outcomes data."

On a positive note, the analysis found that median length of stay for joint replacements has fallen over a five year period among 279 facilities from 3.2 days to 2.3 days.

"That is a direct result of the Affordable Care Act and the requirement to publicly report data and holding back payment where you don't meet certain quality objectives," Czajka said