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Faster, Safer Joint Replacements

Elyas Bakhtiari, for HealthLeaders Magazine, June 11, 2009
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And that loyalty has paid off time after time. It has helped hospital leaders sidestep potential call coverage problems, for instance, and as a result, saved them from potentially choosing between a physician revolt and paying for coverage.

"We got through that difficult topic because of the successful relationship we had. If the doctors thought that we didn't care about them, and we hadn't created a successful environment with the joint center, we might not have gotten through [the call coverage issue] as successfully as we did," Partamian says.

Service Line Success Key No. 4: Control implant costs
One of the areas where it is absolutely essential for hospitals and physicians to be on the same page is device costs. Although volume and revenue have been on the rise, high margins aren't guaranteed in joint replacement surgery, in part because of challenges in controlling implant costs, which are perhaps the most significant controllable expense associated with the surgery.

Physician and hospital reimbursements have been relatively stagnant, or in some cases declining, in recent years, while implant costs have been on the rise. Hip and knee list prices grew 5.6% between 2008 and 2009, and some specific implants jumped by 20% or more, according to the Orthopedic News Network.

The ultimate choice of which implant to use falls on physicians, but it's the hospital the bears the cost.

Hospitals can approach implant costs a couple of ways. There's the top-down approach, in which cost savings are realized when hospital leaders negotiate contracts with vendors. While effective, this approach can limit physician autonomy if the contracts are limited to only a handful of vendors.

An alternative is to put the decision into physicians' hands—give them transparent pricing information and let them control costs at a micro-level in their daily decisions. Even without a program like a gainsharing arrangement, which is still frowned upon by the OIG, physicians have an incentive to save the hospital money, if it means better facilities and more resources for other activities like research. That can be a point of contention if surgeons feel that money from their cost savings efforts are going into general hospital coffers. Even without direct incentives, surgeons are often willing to choose cheaper options, as long as quality isn't sacrificed.

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