Dec 07, 2016
A recent article in Arthoplasty Today presents a striking example of the price of variation in surgical procedures. The article compares cost variation in 29 high-volume hospitals performing primary total knee arthroplasties across the United States. It comes as no surprise that hospitals saw significant variation in both personnel and supply costs from pre-op to post-acute care, despite no difference in clinical outcomes such as risk-adjusted complication and readmission rates.
The remarkable part is that the largest variation in costs were not driven by the orthopedic implant or post-acute care setting but rather by the bone cement used. The article states that hospitals in the 90th percentile of bone cement costs spent 17.4 times more than hospitals in the 10th percentile. The article goes on to note “the variation was caused by having different purchase prices for the same type of cement, using different types of cement (e.g., premixed antibiotic cement is more expensive than hand-mixed or plain bone cement), and using different quantities of cement during the actual procedure.”
Recognizing the Problem and the Solution
Preference cards are both the source of this problem and catalyst for the solution. In the case of the total knee, they indicate the type, brand, and quantity of cement to be used. For those high cost hospitals, it is clear that the items on the preference card are not being reviewed against clinical evidence. The literature and guidelines only support the use of the more expensive antibiotic bone cement under specific circumstances for primary total knee arthroplasties. Application of evidence would drive lower cost of care for these hospitals.
Standardization, in addition, can unlock significant cost savings for health systems. Having physicians review their own cards and agree to a uniform preference card can significantly lower supply utilization and optimize supply chain inventory. One study found that preference card standardization resulted in nearly $200,000 in annual savings for appendectomies at a single hospital, a relatively low cost surgery.
When considering all procedures, physicians, and products, preference card data quickly becomes overwhelming. Physicians neglect to review their preference cards, which results in wasteful spending.
How to Maximize Savings
In order to maximize savings, health systems should undertake three key initiatives:
Technology, data analytics, and easy access to clinical evidence are essential to executing these initiatives successfully, while maintaining high quality outcomes.
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