The market size of the total joint industry in the United States is approximately $6.4 billion today. There are many companies competing in this space, however, there are five companies that own a large majority of the market: Zimmer, DePuy, Stryker, Biomet, and Smith & Nephew.
According to Orthopedic Network News, list prices for primary knees and hips increased 5.3% last year. However, reimbursement from Medicare only increased .8% to $11,748 per case. Since Medicare reimburses on a DRG basis, the payment received from Medicare is expected to cover the entire cost of the case, including the implant. There is also anecdotal evidence suggesting managed care companies are moving towards DRG style reimbursements and away from carve-outs for implants.
Considering the size and complexity of the total joint industry in combination with an ever-changing reimbursement landscape - hospitals are under intense financial pressure.
When attempting to reduce implant costs, educating yourself on the implants themselves and the actual procedure will help immensely. It's very difficult to conduct a successful negotiation if you don't have a reasonable understanding of the product. The website below has helpful information regarding the total joint implants as well as the surgery itself.
A replacement knee or hip joint can cost between $3,500 to $10,000 or more. There are many different component and material combinations for a hip or knee joint that will drive the pricing. Additionally, a surgeon may use standard components or custom components for a joint reconstruction.
Are your surgeons using a demand matching criteria? Is capitated pricing or discount from list price the right strategy? Are your surgeons using custom components? If so, are they under contract?
SHS has a wealth of experience to help make your total joint financials stronger.