The Effectiveness of a Hospital-based Strategy to Reduce the Cost of Total Joint Implants

Our hospital implemented an integrated cost-containment program designed to address the increasing disparity between the cost of orthopaedic implants used for total joint replacements and the amount of hospital reimbursement provided for these procedures. This program was divided into four phases: (1) the analysis of the specific usage of total hip and total knee implants at our institution, (2) the development of surgeons' awareness of the problem and the enlistment of their participation in the process of cost containment, (3) the initiation of a competitive bidding system to select standard prostheses that would be available for general use within the institution, and (4) the establishment of a prosthesis-utilization committee to monitor the process and to make decisions concerning the use of non-standard prostheses. Using this cost-containment program, our hospital greatly reduced the number of vendors and implant systems used; all implants were purchased on a consignment basis, which minimized the cost of implant inventory. The average cost reductions in the first year were 14 per cent for total hip implants and 24 per cent for total knee implants. Over-all implant costs were reduced by an estimated $706,477, or 23 per cent of the budget for implants for the previous year.