[May 23, 2018] |
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Premier Inc. Analysis Finds Potential for Millions of Dollars in Savings in Total Joint Replacements
Healthcare providers have made significant progress in enhancing the
quality of care for total joint replacements. Widespread variation,
however, in medical device prices and other resources still represents a
major opportunity to reduce unnecessary costs for many hospitals, according
to a new analysis of 869 hospitals from Premier Inc. (NASDAQ: PINC),
a leading healthcare improvement company.
The analysis was published in Premier's latest Margin
of Excellence report, which provides unparalleled, data-driven,
evidence-based insights on inpatient and cross-continuum cost and
quality improvement opportunities.
According to the analysis, which was conducted over a 17-month period
(October 2015 to March 2017), Premier found improvements in
length-of-stay for total joint replacement surgery, with the median
falling to two days (50 percent of cases fell between 2-3 days). A
subset of these hospitals also reduced length-of-stay by nearly one day
over a five-year period. Additionally, 30-day readmissions rates were
low for the procedures, with only 3.1 percent of cases readmitted to the
hospital (9,956 out of 283,708 cases).
Large opportunities, however, exist to reduce variation in the costs for
many of the primary hip and knee implants used for total joint
procedures - ultimately helping providers drive greater savings and
reduce healthcare spending. Researchers found providers paid
significantly different prices for a range of hip and knee devices. In a
more detailed examination of nearly 350 hospitals over the past year,
Premier found:
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A $1,500 difference between the top performing and bottom performing
hospitals for knee implants.
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A $1,700 difference between the top performing and bottom performing
hospitals for hip implants.
If all hospitals were able to meet or exceed the top 25th
percentile pricing and close the gap, Premier identified a savings
opportunity of $23.7 million for knee implants and $19.1 million for hip
implants.
"As total joint replacements are the most common procedures performed
nationally, every component - from care delivery protocols to device
acquisition costs - should be scrutinized for opportunities to improve
overall margin," said Robin Czajka, RN, service line vice president of
cost management at Premier. "Implants have been more difficult to manage
in terms of gaining transparency around pricing, but data and tools are
available to help reduce variation and curb price discrepancies for
high-value implants."
Additional areas of resource and labor variation within the cohort
include:
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Anesthesia: There remain large gaps in local and general
anesthesia usage, asdebate continues about which is better for
patient care, with 22 percent of patients receiving local anesthesia
versus 52 percent receiving general anesthesia. Additionally, with
general anesthesia being more expensive than local anesthesia, there
is an opportunity to curb spending if local anesthesia was more widely
used within total joint replacement procedures.
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Operating room time: The highest-performing hospitals accounted
for just over $2,000 in labor spending in the operating room, compared
to the lower-performing hospitals, which accounted for more than
$4,600 in operating room labor spend - signifying opportunities to
enhance throughput within the operating room for total joint
replacements.
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Bone cement: Bone cement with antibiotics is more expensive
than without, yet research does not clearly indicate these products
demonstrate greater effectiveness in improving patient outcomes.
Standard bone cement was used in 39.8 percent of patients studied,
while 29.8 percent received bone cement with antibiotics. Bone cement
with antibiotics costs 120 percent more per patient than without
antibiotics ($618 versus $280).
More than 75 percent of healthcare leaders cite optimizing the use of
high-value implants and other physician preference items as a top
priority to address margin cost improvement, according to a recent
Premier C-suite survey. The cost and quality trends spotlighted in the
recent Margin of Excellence report enables providers to compare
performance against peers and identify potentially unjustified
variation, as well as drill down to contributing institution-, service
line- and physician-level sources of higher costs.
Hospitals that achieved the lowest implant costs shared the following
best practices to secure optimal pricing:
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Cleanse and understand data for a full view into hip and knee device
costs.
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Benchmark pricing against peers to examine price variation for
implants.
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Conduct a thorough analysis with a data expert who understands the
health system's culture, trends, surgeon preferences and vendor
relationships to help develop a realistic approach to pricing and
savings opportunities.
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Get surgeons on board with data to align on goals and ensure pricing
parity is effective.
Examples of success in driving out variation
around total joint costs include:
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Wake Forest Baptist Medical Center (Winston-Salem, NC)
leveraged Premier's cross-reference benchmarking, data analytics and
advisory services to achieve improved pricing parity across suppliers,
generating $775,000 in savings on total joint devices.
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Bayhealth (Dover, DE) targeted implant costs specifically
associated with total hip replacement and total knee replacement
procedures and worked closely with their orthopedic service line to
implement a projected savings of more than $1.1 million on typical
procedures.
Premier's Margin of Excellence reports provide a detailed view on cost
and quality trends across the continuum, as well as share insights on
evidence-based strategies and tools designed to tackle inefficiencies in
healthcare, ranging from variation in clinical practices to resource
utilization. The analyses tap Premier's robust integrated performance
improvement platform PremierConnect®, linking clinical,
financial and supply chain data. Results are leveraged by providers
seeking to pinpoint areas of improvement by comparing their performance
to national peer data.
Methodology Premier researchers reviewed blinded inpatient
data from 869 facilities, representing more than 283,000 patient
discharges over a 17-month period (October 2015 to March 2017) to
examine variation in care delivery and resource costs within total joint
replacements. Additional sub-analyses examined length-of-stay and
implant device pricing.
About Premier Inc. Premier Inc. (NASDAQ: PINC) is a leading
healthcare improvement company, uniting an alliance of approximately
3,900 U.S. hospitals and health systems and approximately 150,000 other
providers and organizations to transform healthcare. With integrated
data and analytics, collaboratives, supply chain solutions, and
consulting and other services, Premier enables better care and outcomes
at a lower cost. Premier, a Malcolm Baldrige National Quality Award
recipient, plays a critical role in the rapidly evolving healthcare
industry, collaborating with members to co-develop long-term innovations
that reinvent and improve the way care is delivered to patients
nationwide. Headquartered in Charlotte, N.C., Premier is passionate
about transforming American healthcare. Please visit Premier's news and
investor sites on www.premierinc.com;
as well as Twitter,
Facebook,
LinkedIn,
YouTube,
Instagram
and Premier's
blog for more information about the company.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180523005889/en/
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