Implant costs are astronomical. They are outpacing our healthcare system’s ability to pay for them. Have we as an industry become callous and created a price-insensitive market? The problem is systemic and not an easy one to solve. In fact, it is a common complaint among hospital administrators and insurance companies alike. So where has our immunity come from?
Commodity implants shouldn’t be seen as innovation.
Commodity-type implants have been incorrectly categorized as being innovative for years, yet most physicians agree that, “a screw is a screw and a plate is a plate.” We all know that clinical outcomes have little to do with whether the surgeon uses Company A’s implants or Company B’s implants. However, surgeons are creatures of habit. The medical device industry has exploited that habit and done well at that. A young surgeon trained in using Company A’s implants during their residency and fellowship programs will most likely use Company A’s implants – you don’t need rocket science to figure that one out. Industry funded academic programs have cleverly managed to create a system where certain implants are by default deemed “high physician preference” and hence non-commodities. Of course, we all agree that surgeons should be comfortable with the equipment they use, but the differences seen within the same product lines throughout different companies are negligible and the techniques for putting in these implants are exactly the same. We all agree innovation is important, but 80% of the procedures done in orthopaedics are commonplace and can be done with everyday technology. So why are they still priced at a premium?
Compliance shouldn’t be leveraged into coercion.
Contracts between vendors and hospitals for lower pricing hinge on merciless market share clauses and highly contingent rebates. While it all sounds good on paper, very rarely are hospitals able to meet the compliance associated with the “deep discounts” they are seeking from the major vendors. Exasperating this issue is the false perception that not meeting these compliance levels, vendors will raise their pricing. What many fail to see or simply choose to ignore is the fact that we live in a free market society. Competition is good and while the contracted vendor may be posturing to raise their prices, they are also highly aware that given the opportunity, any number of competitors are just waiting in the wings to compete for business.
Providers needs to open up and rethink this world of unjustified prices and break free from existing patterns of engaging with implant manufacturers. The holy grail is creating implants with competitive quality and yet have human-friendly pricing.