Value Analysis of a Happy Knee

I’’ve had several conversations over the last couple of days that focused on knee surgery.  One question continually came up: What I am getting for a device that costs twice as much?  Even more dramatic, what do you get for an $800,000 orthopedic robot or a $200,000 computer that helps the surgeon put in a knee?

I’m pretty excited that hospitals are finally asking these tough questions.  I spoke with Stephen Bowerman, CFO and VP of Finance at Midland Memorial in Midland, TX, who had an excellent viewpoint on facing the balancing act of healthcare.  According to Bowerman, “When we look at a capital investment, we look at a lot of different things, such as outcomes and revenue cycles.  This is not just about the right price of physician preference items but also the amount of blood usage or pharmaceutical costs associated with the product and the outcomes.  Our goal is to see if we can change to a lower cost item and still have the positive outcomes.”

This brings me back to the knee and what you get for $800,000?  Alignment errors greater than 3% when putting in an artificial knee are associated with implant failures.  In one study, the misalignment of greater than 3° occurred in only 9.0% of cases when an image-guided computer system (IGS) was used.  Conventional manual techniques had almost a 32% chance of a greater than 3° misalignment.  Surgical orthopedic robots were able to achieve consistent alignment with 1.6°.

After I did the math, I realized that it costs roughly $800 to use IGS technology, which is similar to a study performed at University of San Francisco in 2007.  So, for $800, the patient has an eleven fold reduced chance of needing knee revision surgery.  This has the potential to be used as a major marketing tool for forward-thinking hospitals.

I am currently putting together the numbers for orthopedic robots and will get back to you soon with that information.

James Laskaris, EE, BME
James Laskaris, EE, BME, Emerging Technology Analyst — Mr. James Laskaris is a senior emerging technology analyst at MD Buyline and has been with the company since 1994. With over 30 years of experience in the healthcare field, Mr. Laskaris is the primary analyst of high-end OR technology. He also covers issues related to the legislative and reimbursement effect on healthcare and authors a bimonthly “Issues that Matter” publication. Mr. Laskaris received his biomedical engineering degree from Southern Illinois University. His work has been published in hfm Magazine, Radiology Manager and Healthcare Purchasing News.