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Surgeons Need to Know the Cost of Implants Despite Veil of Secrecy in Healthcare

The United States healthcare system is an industry where a vast amount of information is kept private. However, the trend towards increased transparency, albeit slow-moving, is challenging industry professionals to be open and straightforward about the cost of devices and procedures. Surgical costs are under intense scrutiny, as surgery remains one of the most expensive components of healthcare. Medical devices then, as a part of surgical procedures, are a welcome starting point for cost-effective decisions.

More than $150 billion is spent every year on medical devices in the United States. Within orthopedic procedures, medical devices can make up the largest component of the total procedure cost. Unfortunately, the devices and implants used in orthopedic procedures differ substantially in price, often with little confirmation of varied clinical outcomes. This provides an opportunity for physicians to make cost-effective choices, as their responsibility inside the healthcare system — and to patients — demands it.

Barriers Prevent Surgeons From Knowing Cost

Although surgeons are encouraged to factor in cost while selecting devices, acquiring information about cost is difficult. Many medical device companies regard pricing information as confidential to limit hospitals from comparison shopping. Often, it is to the manufacturer’s advantage if physicians make implant selections without considering price. Many hospitals have signed confidentiality agreements with those manufacturers that include clauses restricting cost disclosure to any third-party, including independent physicians, insurers, and patients. All of these practices are common, leading to a lack of transparency within the market. Reduced transparency stifles innovation, prevents price compression, and disables efficient markets.

To complicate matters further, the price of a given procedure or device may vary widely by hospital or metropolitan area. In Dallas, the highest price of a hip replacement is nearly four times higher than that of the lowest priced procedure. An implant for a wrist fracture in Iowa may cost five times more than an implant for the same procedure in Texas. The price of implantable devices factors into the procedure cost, which in addition to fluctuating by location, can also change over time.

Finally, it is worth noting that some orthopedic surgeons feel no incentive to study the costs of devices they use. However, as surgeons are being held increasingly responsible for cost containment, assessing the price of individual implants is a necessity.

Do Physicians Want to Know Implant Costs?

Between 2012 and 2013, physicians and residents at seven academic medical centers were asked to estimate the costs of thirteen commonly used orthopedic devices. Estimates within 20% of the actual cost was considered correct. Of the 503 physicians who completed the survey, residents correctly estimated the cost of the device 17% of the time, and attending physicians did so 21% of the time. In addition, 36% of physicians and 75% of residents rated their knowledge of device costs “below average” or “poor.” Finally, more than 80% of the survey respondents believe that cost should be important in the device selection process. The results from this study proved that physicians are not confident in their ability to correctly assess the costs of medical devices, although the importance of doing so is undeniable.

In another study, 226 orthopedic surgeons from 6 continents were asked to select a surgical implant for a specific procedure and rank the factors affecting implant choice. The study demonstrated that price awareness reduced implant cost. Specifically, price awareness significantly influences a surgeon’s choice of a specific model within the same implant class. The implications of this study, as well as research regarding physician preferences, shows that surgical expenses can be reduced by raising cost awareness.

The healthcare market is moving towards price transparency, which requires that physicians have access to all cost-related information, even that which was previously undisclosed. The benefits of this, beyond giving individual consumers more responsibility for choosing cost-effective treatment, is enabling surgeons to combat rising healthcare costs. Providing surgeons and physicians visibility into the price of implants will empower strategic, data-driven change within the medical field.