Imagine taking your car to a mechanic who couldn’t tell you how much, say, a new battery would cost. Or, for that matter, the price of any available batteries. What’s more, there’s no way to find out because the manufacturer sells parts to different shops at vastly different prices, and its supply contracts forbid them to revealing the price.
Substitute “artificial hip” for “new battery” and “doctor” for “mechanic,” and you have a accurate picture of the market for medical implants. Doctors at seven major U.S. academic hospitals were unable to estimate the cost of common medical devices such as artificial hips or spinal screws a stunning 81 percent of the time, according to a study published this week in the journal Health Affairs. Their worst guesses ranged from less than 2 percent of the actual price to more than 50 times times the price.
The survey asked 503 orthopedists at institutions from Harvard to Stanford to the Mayo Clinic how much implantable devices cost. Their responses were considered correct if they came within 20 percent of what the hospital actually paid its suppliers for the implant.
Even that price “often varied considerably across institutions,” the authors note. As a matter of course, many supply contracts keep prices confidential, so “widespread dissemination of device prices is not an option at many institutions,” according to the study.
None of the prices were disclosed in the study. What we do know is that spending on medical devices in the U.S. was estimated at about $150 billion in 2010, or roughly a nickel of every health-care dollar. The price of a device is often the largest driver of cost of an orthopedic procedure, Health Affairs reports, a cost that is ultimately paid by either private insurers or Medicare and Medicaid.
Some hospitals have begun recruiting their surgeons to lower device bills, in part by making sure that doctors know the prices of the implants they’re using. Starting in 2009, the Cleveland Clinic began an overhaul of its supply chain that the hospital says has saved it $190 million over the past four years. “Price was one parameter we looked at, but candidly that wasn’t the only parameter,” says Simrit Sandhu, Cleveland Clinic’s executive director of supply chain.
The hospital didn’t want to switch to less costly devices if that meant patient care suffered. The goal instead was to use devices that medical research suggests would lead to the best results for patients, Sandhu said.
Still, in many cases, Cleveland Clinic consolidated contracts from vendors. Spinal implants that used to come from 10 different companies have been narrowed to two vendors, Sandhu says. The clinic kept a contract with an expensive supplier of surgical meshes but limited the use of the most costly product to when circumstances called for it.
Since the review started four years ago, Cleveland Clinic has examined 1,500 product lines or contracts coming up for renewal, Sandhu says, and the process is ongoing. Hospital data analysts monitor published research and the Cleveland Clinic’s own experience to determine the most appropriate devices to use. “We scan the markets constantly,” she says. “The industry’s selling to us constantly. They’re not stopping.” Cleveland Clinic last year formed a separate company called Excelerate to help other hospitals streamline their supply chains.
Getting physicians to embrace such changes is easier in places such as Cleveland Clinic, where doctors are salaried employees of the health system. John O’Brien, former president of UMass Memorial Health Care, says the Massachusetts hospital system encouraged its doctors to use standardized devices so the hospital could get better prices by steering business to one supplier.
That became a harder sell for independent surgeons who could pick where they practice, says O’Brien, now a professor at Clark University. “They don’t particularly care about the cost. They don’t know what the cost is,” he says. Hospitals may keep buying doctors’ preferred devices, even if less expensive implants would suffice, O’Brien says. “You don’t want them to go across town.”
