- Email: [email protected]
Are Critical Pathways and Implant Standardization Programs Effective in Reducing Costs in Total Knee Replacement Operations?
Are Critical Pathways and Implant Standardization Programs Effective in Reducing Costs in Total Knee Replacement Operations? David M Ho, MS, Michael H Huo, MD Total knee replacement (TKR) operation is one of the most effective procedures, both clinically and in terms of cost. Because of increased volume and cost for this procedure during the past 3 decades, TKRs are often targeted for cost reduction. The purpose of this study was to evaluate the efficacy of two cost reducing methodologies, establishment of critical clinical pathways, and standardization of implant costs. STUDY DESIGN: Ninety patients (90 knees) were randomly selected from a population undergoing primary TKR during a 2-year period at a tertiary teaching hospital. Patients were assigned to three groups that corresponded to different strategies implemented during the evolution of the joint-replacement program. Medical records were reviewed for type of anesthesia, operative time, length of stay, and any perioperative complications. Financial information for each patient was compared among the three groups. RESULTS: Data analysis demonstrated that the institution of a critical pathway significantly shortened length of hospital stay and was effective in reducing the hospital costs by 18% (p ⬍ 0.05). In addition, standardization of surgical techniques under the care of a single surgeon substantially reduced the operative time. Selection of implants from a single vendor did not have any substantial effect in additionally reducing the costs. CONCLUSIONS: Standardized postoperative management protocols and critical clinical pathways can reduce costs and operative time. Future efforts must focus on lowering the costs of the prostheses, particularly with competitive bidding or capitation of prostheses costs. Although a singlevendor approach was not effective in this study, it is possible that a cost reduction could have been realized if more TKRs were performed, because the pricing contract was based on projected volume of TKRs to be done by the hospital. (J Am Coll Surg 2007;205:97–100. © 2007 by the American College of Surgeons) BACKGROUND:
Competing Interests Declared: None.
health care in general in the US during the past 3 decades.12,13 Because of the high volume and cost of TKRs, these procedures are often targeted for cost reduction. Several methodologies to reduce costs of TKR operations have been advocated. Major strategies include critical clinical pathways to reduce hospital stay–related costs and implant standardization programs to reduce the costs of the prostheses.13-15 The purpose of this study was to evaluate the impact of a clinical pathway and, more specifically, implant standardization to the development of a joint-replacement service at a teaching hospital.
Received August 14, 2006; Revised March 3, 2007; Accepted March 5, 2007. From the Department of Orthopedic Surgery, University of Texas Southwestern Medical Center, Dallas, TX. Correspondence address: Michael H Huo, MD, University of Texas Southwestern Medical Center, 1801 Inwood Road, Dallas, TX 75390-8883. email: [email protected]
METHODS Ninety patients (90 knees) were randomly selected from a population undergoing primary TKRs during a 2-year period at a tertiary teaching hospital. Eighty percent of
Total knee replacement (TKR) operations are among the most clinically effective orthopaedic operations, because the improvement in overall health quality and functional status of patients undergoing TKR is generally maintained for long durations.1-3 They are also one of the most cost-effective major medical interventions.4-8 During the past 3 decades, the frequency of these operations in the US has increased dramatically,9-11 as have the costs involved in performing these operations. This increase in cost has occurred parallel to the increase of
© 2007 by the American College of Surgeons Published by Elsevier Inc.
97
ISSN 1072-7515/07/$32.00 doi:10.1016/j.jamcollsurg.2007.03.009
98
Ho and Huo
TKR and Cost Reduction
J Am Coll Surg
Table 1. Patient Characteristics Characteristic
Age (y) Gender, M/F Diagnosis, OA/RA Weight (kg) Height (cm) ASA class, II/III
Table 2. List of Vendors Used by Group
Group 1
Group 2
Group 3
68 14/16 28/2 88 170 24/6
67 14/16 28/2 91 172 24/6
66 14/16 28/2 89 168 24/6
ASA, American Society of Anesthesiologists; F, female; M, male; OA, osteoarthritis; RA, rheumatoid arthritis.
the patients were under managed care and the remaining 20% were under Medicare. The study period was designed to cover 2 consecutive fiscal years. During the first fiscal year, 62 TKRs were performed at the hospital. Thirty patients from this cohort were randomly selected. All procedures were unilateral. These patients constituted group 1. All procedures were done under the care of two attending surgeons with resident physicians. There were no uniform criteria for implant selection, vendor choice, surgical techniques, or postoperative management protocols. During the second fiscal year, 112 TKRs were performed. Seventy-seven of these were done under the care of a third surgeon, who was recruited to develop a jointreplacement service at the hospital. Sixty patients from this set were randomly selected. These patients were selected to match those patients in group 1 with regard to demographics and medical comorbidities (Table 1). These patients were then separated into 2 groups of 30 patients according to time intervals, during which they underwent operations: group 2 (first 6 months of the second year) and group 3 (second 6 months of the second year). Patients in group 2 underwent TKRs using uniform criteria of implant selection, surgical techniques, and institution of a critical clinical pathway. There was no limitation of vendor choice. Patients in group 3 were managed using the same protocol as group 2 and, additionally, had a contractual agreement between a single vendor and the hospital purchasing department. The pricing structure with the vendor was based on the projected volume of TKRs to be done at the hospital. The implant system used was selected based on competitive bidding set forth by the hospital operating room purchasing manager. The medical records were reviewed for the type of anesthesia, operative time, length of hospital stay, and any perioperative complications during the first 90 days
Vendor
J&J/DePuy Stryker Biomet
Group 1
Group 2
Group 3
16 6 8
16 4 10
— 30 —
Biomet, Warsaw, IN; J&J/DePuy, Johnson&Johnson DePuy, Warsaw, IN; Stryker, Mahwah, NJ.
after operation. The financial information for each patient was obtained from the hospital business office, and payors were identified. Hospital costs were used for comparison, and these figures were adjusted for a 4% inflation increase during the 2 fiscal years of this study. The hospital cost accounting system separated the costs of TKR into three subcategories; prostheses; room and board; and other expenses, which included supplies, laboratory and radiology tests, physical therapy, and medications. No professional fees for physicians were included in this comparison. Statistical analysis was done by using the ANOVA test with Fisher’s protected least significant difference. Comparison was performed among the three groups and inbetween groups. Significance was defined as p ⬍ 0.05. RESULTS There was no difference in the demographics among the three groups. There was also no difference in the medical comorbidity as measured by the American Society of Anesthesiologists status. General anesthesia was used in 60% of patients and regional in 40%. All TKRs in group 1 were performed using posterior cruciate-retaining designs with hybrid fixation (cementless femoral and cemented tibial components). Patellar resurfacing was performed in 4 of the 30 TKRs in group 1. All TKRs in groups 2 and 3 were performed using posterior cruciatesubstituting designs with cement fixation. Patellar resurfacing was performed using an all-polyethylene component inserted with cement in all 60 knees in these 2 groups. The various vendors that supplied the prosthetic implants are listed in Table 2. There were 3 vendors in group 1, 3 in group 2, and 1 in group 3. Operative time was longer in group 1 than in the other 2 groups (p ⬍ 0.0001). There was no difference between groups 2 and 3 (p ⫽ 0.27) (Table 3). Mean length of hospital stay was longer in group 1 than in the other 2 groups (p ⬍ 0.0001), which reflected the postoperative management protocols for a 4-day hospital stay as part of the critical clinical pathway for primary
Vol. 205, No. 1, July 2007
Ho and Huo
Table 3. Mean Operative Time, Length of Stay, and Complications Operative time (min) Length of stay (d) Complications UTI Fracture† Manipulation‡
TKR and Cost Reduction
99
Table 4. Mean Hospital Costs by Group
Group 1
Group 2
Group 3
134 6.3
102* 4.2*
111* 3.9*
2 — —
2 1 —
1 — 1
*p ⬍ 0.05 when compared with group 1. † Tibial plateau fracture from impacting the tibial baseplate in total knee replacement. ‡ Manipulation for arthrofibrosis after total knee replacement. UTI, urinary tract infection.
TKRs implemented in groups 2 and 3. Hospital stay was longer than 4 days in 25 patients and exactly 4 days in 5 patients in group 1. In group 2, hospital stay was exactly 4 days in 25 patients and longer than 4 days in 5 patients (5 days in all). Finally, hospital stay was exactly 4 days in 19 patients in group 3, fewer than 4 days in 5 (3 days in all), and longer than 4 days in 2 (6 and 8 days, respectively) patients in group 3. Compliance rate for the critical clinical pathway for group 2 and group 3 was 83% and 63%, respectively. Conversely, the incidence of hospital stay longer than planned for in the critical clinical pathway in groups 2 and 3 was 17% and 7%, respectively. There was no difference in the mean length of stay between groups 2 and 3 (p ⫽ 0.37) A similar proportion of patients (65%) were able to be discharged directly home in both groups 2 and 3 during the study period. This implies that a shortened hospital stay did not have any immediate adverse effects on the patients’ rehabilitation and clinical outcomes. Complications were infrequent during the first 90 days after operation with no difference among the 3 groups (Table 3). Analysis of the insurance payor mix demonstrated that 24, 23, and 24 patients were under managed-care plans, respectively, for groups 1, 2, and 3. The remaining patients in these groups were under Medicare coverage. Mean total hospital costs and the 3 subcategories for each group are listed in Table 4. There was a significant difference between group 1 and the other 2 groups (p ⬍ 0.0001), and no difference was seen between groups 2 and 3 (p ⫽ 0.20). Mean reduction of the total costs was $2,430 between groups 1 and 2 and slightly less between groups 1 and 3 at $1,765. These differences represented 21% and 15% reduction of total hospital costs, respectively. Thirty-nine percent of the difference between groups 1 and 2 was a result of reduction in room costs,
Total ($) Prostheses ($) Room and board ($) Other costs ($)
Group 1
Group 2
Group 3
11,767 3,351 2,662 5,754
9,337* 3,433 1,720* 4,184*
10,002* 3,589 1,876* 4,537*
*p ⬍ 0.05 when compared with group 1.
and the other 61% was a result of reduction in other charges, such as fewer laboratory tests, medications, and physical therapy that was secondary to the reduced length of stay. There was no reduction in the costs for the prostheses. Between group 1 and group 3, 45% of the difference was a result of a reduction in the room costs, and the other 55% was the secondary reduction of other costs. There was again no reduction in the costs for the prostheses. In fact, there was an average increase of $82 (2.5%) and $238 (7.1%) of the costs for the prostheses per patient in groups 2 and 3, respectively. DISCUSSION Currently, nearly 450,000 TKRs are being performed annually in the US.9-11,16 The direct costs associated with a single total joint-replacement operation were estimated to be in excess of $20,000 in 1986.8 This figure has dramatically decreased to approximately $10,000 to $12,000 per patient with the evolution of reforms in the access, delivery, and management of health care in the US during the same time period. The total expenditure in providing joint-replacement operations to the US population is estimated to be more than $6 billion annually. This economic impact is likely to grow, given the aging of the “baby boomer” population. This retrospective review of the financial efficacy of a prospective program was conducted to test two hypotheses, ie, is the institution of critical clinical pathways effective in reducing the costs of performing TKRs at our hospital? And is using a single vendor effective in additionally reducing that variable cost? Total revenue received by the hospital was $430,500 for the 30 TKRs performed in group 1. In contrast, the total revenue was $341,610 in group 2 and $365,940 in group 3. These represented decreases of 21% and 15%, respectively. Total revenue from the joint-replacement service was considerably higher in the second fiscal year because of the higher volume of patients. Actual estimated profit for a TKR was $1,073 during the second fiscal year. Estimated total profit for the 112 procedures was $120,176 for that fiscal year.
100
Ho and Huo
TKR and Cost Reduction
Data in this study did demonstrate a substantial reduction of mean total costs among the 3 groups of patients during these 2 fiscal years. Reductions in costs were primarily a result of reduced length of hospital stay as a result of the implementation of standardized postoperative management protocols as part of the critical clinical pathway. Reduction in costs for other services was secondary to the shortened length of stay. We were disappointed to note that there was no substantial reduction in prostheses, the single largest variable cost in any joint-replacement operation. Some of the differences seen in the prostheses category might be reflective of more cement use and resurfacing of the patella in all group 2 and group 3 patients. Stern and colleagues17 have stated that additional cost-containment efforts must be concentrated in reducing variable costs, such as supply and implant costs. In this study, the prostheses costs were, on average, 28% of the total for patients in group 1. This proportion rose to 37% for group 2 and 36% for group 3, which reflects the fact that prostheses now constitute a greater portion of total TKR cost as a result of the decrease in all other costs with no reduction in prostheses costs. Similarly, other authors have also attributed a greater proportion of overall costs to the costs of prostheses.12,13 Data from this study suggest that standardizing surgical techniques as part of a critical clinical pathway and implant selection criteria had only a secondary effect in overall cost reduction after the primary effect of a reduced length of hospital stay. We believe, as others have reported, that future efforts must take the direction of lowering the costs of prostheses, particularly with competitive bidding and capitation of prostheses costs. Implant standardization programs have been previously advocated by many12,13,18 and successful in others.19 We were disappointed that a single-vendor approach to pricing reduction was not proved to be effective in our analysis. This was most likely a reflection of the pricing structure within the particular contract. Author Contributions
Study conception and design: Huo Acquisition of data: Huo Analysis and interpretation of data: Ho, Huo Drafting of manuscript: Ho, Huo Critical revision: Ho, Huo
J Am Coll Surg
REFERENCES 1. Laupacis A, Bourne R, Rorabeck C, et al. The effect of elective total hip replacement on health-related quality of life. J Bone Joint Surg Am 1993;75:1619–1626. 2. Rissanen P, Aro S, Slatis P, et al. Health and quality of life before and after hip or knee arthroplasty. J Arthroplasty 1995;10:169– 175. 3. Wiklund I, Romanus B. A comparison of quality of life before and after arthroplasty in patients who had arthrosis of the hip joint. J Bone Joint Surg Am 1991;73:765–769. 4. Clark CR. Cost containment: total joint implants. J Bone Joint Surg Am 1994;76:799–800. 5. Friedman B, Elixhauser A. Increased use of an expensive, elective procedure: total hip replacement in the 1980s. Med Care 1993; 31:581–599. 6. Laupacis A, Feeny D, Detsky AS, Tugwell PX. How attractive does a new technology have to be to warrant adoption and utilization? Tentative guidelines for using clinical and economic evaluations. Can Med Assoc J 1992;146:473–481. 7. Laupacis A, Bourne R, Rorabeck C, et al. Costs of elective total hip arthroplasty during the first year. Cemented versus noncemented. J Arthroplasty 1994;9:481–487. 8. Liang MH, Cullen KE, Larson MG. Cost-effectiveness of total joint arthroplasty in osteoarthritis. Arthritis Rheum 1986;29: 937–943. 9. Melton LJ, Stauffer RN, Chao EY, Ilstrup DM. Rates of total hip arthroplasty. N Engl J Med 1982;11:1242–1245. 10. Praemer A, Furner S, Rice DP. Musculoskeletal conditions in the United States. Am Acad Orthop Surg 1992;1:27–41. 11. Kurtz S, Mowat F, Ong K, et al. Prevalence of primary and revision total hip and knee arthroplasty in the United States from 1990 through 2002. J Bone Joint Surg Am 2005;87:1487– 1497. 12. Barber TC, Healy WL. The hospital cost of total hip arthroplasty: A comparison between 1981 and 1990. J Bone Joint Surg Am 1993;75:321–325. 13. Healy WL, Kirven FM, Iorio R. Implant standardization for total hip arthroplasty. An implant selection and cost reduction program. J Arthroplasty 1995;10:177–183. 14. Zuckerman JD, Kummer FJ, Frankel VH. The effectiveness of a hospital-based strategy to reduce the cost of total joint implants. J Bone Joint Surg Am 1994;76:807–811. 15. Meyers SJ, Reuben JD, Cox DD, Watson M. Inpatient cost of primary total joint arthroplasty. J Arthroplasty 1996;11:281– 285. 16. Moss AJ, Hamburger S, Moore RM, et al. Use of selected medical device implants in the United States, 1988. Adv Data 1991; 26:1–24. 17. Stern SH, Singer LB, Weissman SE. Analysis of hospital cost in total knee arthroplasty. Does length of stay matter? Clin Orthop Relat Res 1995;321:36–44. 18. Healy WL, Finn D. The hospital cost and the cost of the implants for total knee arthroplasty. J Bone Joint Surg Am 1994; 76:801–806. 19. Johnston DW, Beaupre LA, Davies DM, Hessels R. Reducing arthroplasty costs via vendor contracts. Can J Surg 1999;42: 445–449.
Competing Interests Declared: None.
health care in general in the US during the past 3 decades.12,13 Because of the high volume and cost of TKRs, these procedures are often targeted for cost reduction. Several methodologies to reduce costs of TKR operations have been advocated. Major strategies include critical clinical pathways to reduce hospital stay–related costs and implant standardization programs to reduce the costs of the prostheses.13-15 The purpose of this study was to evaluate the impact of a clinical pathway and, more specifically, implant standardization to the development of a joint-replacement service at a teaching hospital.
Received August 14, 2006; Revised March 3, 2007; Accepted March 5, 2007. From the Department of Orthopedic Surgery, University of Texas Southwestern Medical Center, Dallas, TX. Correspondence address: Michael H Huo, MD, University of Texas Southwestern Medical Center, 1801 Inwood Road, Dallas, TX 75390-8883. email: [email protected]
METHODS Ninety patients (90 knees) were randomly selected from a population undergoing primary TKRs during a 2-year period at a tertiary teaching hospital. Eighty percent of
Total knee replacement (TKR) operations are among the most clinically effective orthopaedic operations, because the improvement in overall health quality and functional status of patients undergoing TKR is generally maintained for long durations.1-3 They are also one of the most cost-effective major medical interventions.4-8 During the past 3 decades, the frequency of these operations in the US has increased dramatically,9-11 as have the costs involved in performing these operations. This increase in cost has occurred parallel to the increase of
© 2007 by the American College of Surgeons Published by Elsevier Inc.
97
ISSN 1072-7515/07/$32.00 doi:10.1016/j.jamcollsurg.2007.03.009
98
Ho and Huo
TKR and Cost Reduction
J Am Coll Surg
Table 1. Patient Characteristics Characteristic
Age (y) Gender, M/F Diagnosis, OA/RA Weight (kg) Height (cm) ASA class, II/III
Table 2. List of Vendors Used by Group
Group 1
Group 2
Group 3
68 14/16 28/2 88 170 24/6
67 14/16 28/2 91 172 24/6
66 14/16 28/2 89 168 24/6
ASA, American Society of Anesthesiologists; F, female; M, male; OA, osteoarthritis; RA, rheumatoid arthritis.
the patients were under managed care and the remaining 20% were under Medicare. The study period was designed to cover 2 consecutive fiscal years. During the first fiscal year, 62 TKRs were performed at the hospital. Thirty patients from this cohort were randomly selected. All procedures were unilateral. These patients constituted group 1. All procedures were done under the care of two attending surgeons with resident physicians. There were no uniform criteria for implant selection, vendor choice, surgical techniques, or postoperative management protocols. During the second fiscal year, 112 TKRs were performed. Seventy-seven of these were done under the care of a third surgeon, who was recruited to develop a jointreplacement service at the hospital. Sixty patients from this set were randomly selected. These patients were selected to match those patients in group 1 with regard to demographics and medical comorbidities (Table 1). These patients were then separated into 2 groups of 30 patients according to time intervals, during which they underwent operations: group 2 (first 6 months of the second year) and group 3 (second 6 months of the second year). Patients in group 2 underwent TKRs using uniform criteria of implant selection, surgical techniques, and institution of a critical clinical pathway. There was no limitation of vendor choice. Patients in group 3 were managed using the same protocol as group 2 and, additionally, had a contractual agreement between a single vendor and the hospital purchasing department. The pricing structure with the vendor was based on the projected volume of TKRs to be done at the hospital. The implant system used was selected based on competitive bidding set forth by the hospital operating room purchasing manager. The medical records were reviewed for the type of anesthesia, operative time, length of hospital stay, and any perioperative complications during the first 90 days
Vendor
J&J/DePuy Stryker Biomet
Group 1
Group 2
Group 3
16 6 8
16 4 10
— 30 —
Biomet, Warsaw, IN; J&J/DePuy, Johnson&Johnson DePuy, Warsaw, IN; Stryker, Mahwah, NJ.
after operation. The financial information for each patient was obtained from the hospital business office, and payors were identified. Hospital costs were used for comparison, and these figures were adjusted for a 4% inflation increase during the 2 fiscal years of this study. The hospital cost accounting system separated the costs of TKR into three subcategories; prostheses; room and board; and other expenses, which included supplies, laboratory and radiology tests, physical therapy, and medications. No professional fees for physicians were included in this comparison. Statistical analysis was done by using the ANOVA test with Fisher’s protected least significant difference. Comparison was performed among the three groups and inbetween groups. Significance was defined as p ⬍ 0.05. RESULTS There was no difference in the demographics among the three groups. There was also no difference in the medical comorbidity as measured by the American Society of Anesthesiologists status. General anesthesia was used in 60% of patients and regional in 40%. All TKRs in group 1 were performed using posterior cruciate-retaining designs with hybrid fixation (cementless femoral and cemented tibial components). Patellar resurfacing was performed in 4 of the 30 TKRs in group 1. All TKRs in groups 2 and 3 were performed using posterior cruciatesubstituting designs with cement fixation. Patellar resurfacing was performed using an all-polyethylene component inserted with cement in all 60 knees in these 2 groups. The various vendors that supplied the prosthetic implants are listed in Table 2. There were 3 vendors in group 1, 3 in group 2, and 1 in group 3. Operative time was longer in group 1 than in the other 2 groups (p ⬍ 0.0001). There was no difference between groups 2 and 3 (p ⫽ 0.27) (Table 3). Mean length of hospital stay was longer in group 1 than in the other 2 groups (p ⬍ 0.0001), which reflected the postoperative management protocols for a 4-day hospital stay as part of the critical clinical pathway for primary
Vol. 205, No. 1, July 2007
Ho and Huo
Table 3. Mean Operative Time, Length of Stay, and Complications Operative time (min) Length of stay (d) Complications UTI Fracture† Manipulation‡
TKR and Cost Reduction
99
Table 4. Mean Hospital Costs by Group
Group 1
Group 2
Group 3
134 6.3
102* 4.2*
111* 3.9*
2 — —
2 1 —
1 — 1
*p ⬍ 0.05 when compared with group 1. † Tibial plateau fracture from impacting the tibial baseplate in total knee replacement. ‡ Manipulation for arthrofibrosis after total knee replacement. UTI, urinary tract infection.
TKRs implemented in groups 2 and 3. Hospital stay was longer than 4 days in 25 patients and exactly 4 days in 5 patients in group 1. In group 2, hospital stay was exactly 4 days in 25 patients and longer than 4 days in 5 patients (5 days in all). Finally, hospital stay was exactly 4 days in 19 patients in group 3, fewer than 4 days in 5 (3 days in all), and longer than 4 days in 2 (6 and 8 days, respectively) patients in group 3. Compliance rate for the critical clinical pathway for group 2 and group 3 was 83% and 63%, respectively. Conversely, the incidence of hospital stay longer than planned for in the critical clinical pathway in groups 2 and 3 was 17% and 7%, respectively. There was no difference in the mean length of stay between groups 2 and 3 (p ⫽ 0.37) A similar proportion of patients (65%) were able to be discharged directly home in both groups 2 and 3 during the study period. This implies that a shortened hospital stay did not have any immediate adverse effects on the patients’ rehabilitation and clinical outcomes. Complications were infrequent during the first 90 days after operation with no difference among the 3 groups (Table 3). Analysis of the insurance payor mix demonstrated that 24, 23, and 24 patients were under managed-care plans, respectively, for groups 1, 2, and 3. The remaining patients in these groups were under Medicare coverage. Mean total hospital costs and the 3 subcategories for each group are listed in Table 4. There was a significant difference between group 1 and the other 2 groups (p ⬍ 0.0001), and no difference was seen between groups 2 and 3 (p ⫽ 0.20). Mean reduction of the total costs was $2,430 between groups 1 and 2 and slightly less between groups 1 and 3 at $1,765. These differences represented 21% and 15% reduction of total hospital costs, respectively. Thirty-nine percent of the difference between groups 1 and 2 was a result of reduction in room costs,
Total ($) Prostheses ($) Room and board ($) Other costs ($)
Group 1
Group 2
Group 3
11,767 3,351 2,662 5,754
9,337* 3,433 1,720* 4,184*
10,002* 3,589 1,876* 4,537*
*p ⬍ 0.05 when compared with group 1.
and the other 61% was a result of reduction in other charges, such as fewer laboratory tests, medications, and physical therapy that was secondary to the reduced length of stay. There was no reduction in the costs for the prostheses. Between group 1 and group 3, 45% of the difference was a result of a reduction in the room costs, and the other 55% was the secondary reduction of other costs. There was again no reduction in the costs for the prostheses. In fact, there was an average increase of $82 (2.5%) and $238 (7.1%) of the costs for the prostheses per patient in groups 2 and 3, respectively. DISCUSSION Currently, nearly 450,000 TKRs are being performed annually in the US.9-11,16 The direct costs associated with a single total joint-replacement operation were estimated to be in excess of $20,000 in 1986.8 This figure has dramatically decreased to approximately $10,000 to $12,000 per patient with the evolution of reforms in the access, delivery, and management of health care in the US during the same time period. The total expenditure in providing joint-replacement operations to the US population is estimated to be more than $6 billion annually. This economic impact is likely to grow, given the aging of the “baby boomer” population. This retrospective review of the financial efficacy of a prospective program was conducted to test two hypotheses, ie, is the institution of critical clinical pathways effective in reducing the costs of performing TKRs at our hospital? And is using a single vendor effective in additionally reducing that variable cost? Total revenue received by the hospital was $430,500 for the 30 TKRs performed in group 1. In contrast, the total revenue was $341,610 in group 2 and $365,940 in group 3. These represented decreases of 21% and 15%, respectively. Total revenue from the joint-replacement service was considerably higher in the second fiscal year because of the higher volume of patients. Actual estimated profit for a TKR was $1,073 during the second fiscal year. Estimated total profit for the 112 procedures was $120,176 for that fiscal year.
100
Ho and Huo
TKR and Cost Reduction
Data in this study did demonstrate a substantial reduction of mean total costs among the 3 groups of patients during these 2 fiscal years. Reductions in costs were primarily a result of reduced length of hospital stay as a result of the implementation of standardized postoperative management protocols as part of the critical clinical pathway. Reduction in costs for other services was secondary to the shortened length of stay. We were disappointed to note that there was no substantial reduction in prostheses, the single largest variable cost in any joint-replacement operation. Some of the differences seen in the prostheses category might be reflective of more cement use and resurfacing of the patella in all group 2 and group 3 patients. Stern and colleagues17 have stated that additional cost-containment efforts must be concentrated in reducing variable costs, such as supply and implant costs. In this study, the prostheses costs were, on average, 28% of the total for patients in group 1. This proportion rose to 37% for group 2 and 36% for group 3, which reflects the fact that prostheses now constitute a greater portion of total TKR cost as a result of the decrease in all other costs with no reduction in prostheses costs. Similarly, other authors have also attributed a greater proportion of overall costs to the costs of prostheses.12,13 Data from this study suggest that standardizing surgical techniques as part of a critical clinical pathway and implant selection criteria had only a secondary effect in overall cost reduction after the primary effect of a reduced length of hospital stay. We believe, as others have reported, that future efforts must take the direction of lowering the costs of prostheses, particularly with competitive bidding and capitation of prostheses costs. Implant standardization programs have been previously advocated by many12,13,18 and successful in others.19 We were disappointed that a single-vendor approach to pricing reduction was not proved to be effective in our analysis. This was most likely a reflection of the pricing structure within the particular contract. Author Contributions
Study conception and design: Huo Acquisition of data: Huo Analysis and interpretation of data: Ho, Huo Drafting of manuscript: Ho, Huo Critical revision: Ho, Huo
J Am Coll Surg
REFERENCES 1. Laupacis A, Bourne R, Rorabeck C, et al. The effect of elective total hip replacement on health-related quality of life. J Bone Joint Surg Am 1993;75:1619–1626. 2. Rissanen P, Aro S, Slatis P, et al. Health and quality of life before and after hip or knee arthroplasty. J Arthroplasty 1995;10:169– 175. 3. Wiklund I, Romanus B. A comparison of quality of life before and after arthroplasty in patients who had arthrosis of the hip joint. J Bone Joint Surg Am 1991;73:765–769. 4. Clark CR. Cost containment: total joint implants. J Bone Joint Surg Am 1994;76:799–800. 5. Friedman B, Elixhauser A. Increased use of an expensive, elective procedure: total hip replacement in the 1980s. Med Care 1993; 31:581–599. 6. Laupacis A, Feeny D, Detsky AS, Tugwell PX. How attractive does a new technology have to be to warrant adoption and utilization? Tentative guidelines for using clinical and economic evaluations. Can Med Assoc J 1992;146:473–481. 7. Laupacis A, Bourne R, Rorabeck C, et al. Costs of elective total hip arthroplasty during the first year. Cemented versus noncemented. J Arthroplasty 1994;9:481–487. 8. Liang MH, Cullen KE, Larson MG. Cost-effectiveness of total joint arthroplasty in osteoarthritis. Arthritis Rheum 1986;29: 937–943. 9. Melton LJ, Stauffer RN, Chao EY, Ilstrup DM. Rates of total hip arthroplasty. N Engl J Med 1982;11:1242–1245. 10. Praemer A, Furner S, Rice DP. Musculoskeletal conditions in the United States. Am Acad Orthop Surg 1992;1:27–41. 11. Kurtz S, Mowat F, Ong K, et al. Prevalence of primary and revision total hip and knee arthroplasty in the United States from 1990 through 2002. J Bone Joint Surg Am 2005;87:1487– 1497. 12. Barber TC, Healy WL. The hospital cost of total hip arthroplasty: A comparison between 1981 and 1990. J Bone Joint Surg Am 1993;75:321–325. 13. Healy WL, Kirven FM, Iorio R. Implant standardization for total hip arthroplasty. An implant selection and cost reduction program. J Arthroplasty 1995;10:177–183. 14. Zuckerman JD, Kummer FJ, Frankel VH. The effectiveness of a hospital-based strategy to reduce the cost of total joint implants. J Bone Joint Surg Am 1994;76:807–811. 15. Meyers SJ, Reuben JD, Cox DD, Watson M. Inpatient cost of primary total joint arthroplasty. J Arthroplasty 1996;11:281– 285. 16. Moss AJ, Hamburger S, Moore RM, et al. Use of selected medical device implants in the United States, 1988. Adv Data 1991; 26:1–24. 17. Stern SH, Singer LB, Weissman SE. Analysis of hospital cost in total knee arthroplasty. Does length of stay matter? Clin Orthop Relat Res 1995;321:36–44. 18. Healy WL, Finn D. The hospital cost and the cost of the implants for total knee arthroplasty. J Bone Joint Surg Am 1994; 76:801–806. 19. Johnston DW, Beaupre LA, Davies DM, Hessels R. Reducing arthroplasty costs via vendor contracts. Can J Surg 1999;42: 445–449.