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Facility managers are mad as hell about the cost of implants. They think they're priced too high and reimbursed too low. They feel the game is fixed against facilities and in favor of implant companies and payers, enabled largely by inflexible physicians who insist on pet implants and undermine facility bargaining muscle.
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Put a Stop(light) to High Implant Costs |
Sometimes, the best solution is also the simplest one. That's what Elaine Jones, RN, CNOR, BS, manager of surgical services with the St. Joseph Health Center in Warren, Ohio, learned when she decided it was time to put a stop to her excessive total knee costs. She simply grouped the six knee implants that her surgeons were using into three price categories: high, moderate and low. She did so using a large stoplight that she posted in the doctors' lounge and orthopedic room - with the highest-priced implants in the red zone, the moderately priced knees in the yellow zone and the lower-priced implants in the green area. "It was remarkable how fast vendors started trying to get their knees down to the green light," says Ms. Jones. "And it was just as remarkable to see our surgeons realize for the first time how much of a price difference there was between one knee and another." The prices ranged from $3,800 to $8,000 per knee. By bringing costs to light, Ms. Jones saved St. Joseph about $200,000 on knees alone last year. The $8,000 knee now costs the facility just $4,200; the $5,000 knee costs $3,900; and the $3,800 knee came down to $3,700. "You can do it for vascular stents, vascular graphs, total hips, spine implants and just about anything you carry in inventory," she says. |
But the balance of power appears to be shifting, according to our survey of 445 surgery facility managers (results on page 65). Managers are getting much better at alternately educating, cajoling, shaming and outwitting surgeons who insist on pricey implants. They're encountering a much more receptive audience now that many physicians are facility shareholders. Today, close to two-thirds of all facility managers who've tried to persuade surgeons to help them obtain more economic deals say they've been at least somewhat successful. The newfound support from physicians has empowered managers to get much tougher with implant companies, erecting obstacles to thwart persuasive implant salespeople and clamping down on the prices they'll pay. "We're gaining ground," says the director of surgical and anesthesia services for a Minnesota hospital.
'One of the biggest cost drivers'
Virtually all our respondents call implants pricey in relation to other items they purchase for surgical cases - 69 percent call them "very costly" and 26 percent say they're "somewhat costly." A Colorado surgery center administrator calls them "one of the biggest drivers of healthcare cost in the country."
Not surprisingly, our respondents think controlling implant prices is important to the profitability of the facility. Four out of five say it's "very important" and another 12 percent say it's "somewhat important."
The reason price control is so important is simple. Although implant prices can be sky-high, reimbursement for implants is generally awful.
Hospitals typically get carveouts from all insurers for implants, but very often they're capitated. High-priced implants exceed the cap and cut into or eliminate the profits on the case. Says a surgical services director at an Alabama hospital: "I'm not looking to gain profits by marking up an implant for resale. I'm happy to break even." But he says he often cannot because of lousy implant reimbursements from Blue Cross/Blue Shield in his state.
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