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Physicians' Ties to IMD Manufacturers Can Ratchet Up Costs

Joe Cantlupe, for HealthLeaders Media, February 23, 2012

According to the report, one hospital paid 83% more than another for the exact same knee implant.

Orthopedic and cardiac procedures accounted for nearly all IMD-related Medicare expenditures from 2004 through 2009.  That is only expected to continue to grow. A recent HealthLeaders Media Industry 2012 survey (PDF )shows that 23% of physician leaders say that has a revenue growth potential of 6% or more over the next 3 to 5 years for orthopedic programs; with 16% saying heart programs will have similar growth.  Some 46% say they anticipate growth in both service lines at least 1% to 5%.

There is a way to begin fighting the explosion of costs: If the physician-hospital relationship is strong, hospitals can consider evaluating purchases from many IMD suppliers, and using this competitive information to gain leverage for lower prices, the GAO suggests.

One of the systems that has been successful in reducing  implant costs, for instance, has been the University of California San Francisco Medical Center, which established a protocol involving physicians and administrators in purchasing arrangements, says Eula Mckinney, MsHA, director of the general surgery, orthopedics, pain management and spine service lines for USMC.

UCSMC began tackling the problem of expenses a few years ago after it projected millions of dollars of losses in spinal implant costs. In response, the medical center established a committee implant purchasing structure involving administrators and physicians that enabled them to work "in harmony," Mckinney says.

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