Background
The hospital cost of total knee arthroplasty (TKA) in the United States is a major growing expense for the Centers for Medicare & Medicaid Services (CMS). Many hospitals are unable to deliver TKA with profitable or breakeven economics under the current Diagnosis-Related Group (DRG) hospital reimbursement system.

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Hospital Economics of Primary Total Knee Arthroplasty at a Teaching Hospital

We performed a bibliographic search of MEDLINE databases from January 1966 to July 2002 to identify English language articles that contained either "cost" or "economic" in combination with "total hip arthroplasty" (THA) in the abstract or title. Each study was then critically reviewed for content, technique, and adherence to established healthcare economic principles. Only 81 of the 153 studies retrieved contained actual economic data. Only 6% of studies adhered to established criteria for a comprehensive health care economic analysis. Although the number of publications regarding economic evaluation of THA is on the rise, the methodologic quality of many of these studies remains inadequate. Future studies should employ sound healthcare economic techniques to properly evaluate and assess the true social and economic value of THA.

Economic evaluation in total hip arthroplasty: analysis and review of the literature

Background: Hospital revenues for orthopaedic operations are not keeping pace with inflation or with rising hospital expenses. In an attempt to reduce the hospital cost of orthopaedic operations by reducing the cost of operating-room supplies, we developed a Single Price/Case Price Purchasing Program for implants used in total hip arthroplasty, total knee arthroplasty, and total shoulder arthroplasty as well as for arthroscopic shavers and burrs, interference screws, and bone-suture anchors.

Methods: The Lahey Clinic asked orthopaedic vendors to supply all instruments, implants, and disposable items related to these selected products for one single price per unit or case. For example, a single price for total hip arthroplasty implants included instruments, acetabular cups, acetabular liners, acetabular screws, femoral stems, femoral heads, and stem centralizers, if required. The hospital implemented the Single Price/Case Price Purchasing Program with a competitive-bid request for proposal. Surgeons evaluated the responses to the bidding process, and they made final decisions on product selection.

Results: The Single Price/Case Price Purchasing Program at the Lahey Clinic was successful in reducing the cost of orthopaedic implants and supplies. In the present article, we could not disclose the specific prices that we agreed to pay our vendors. The specific cost reductions were 32 percent for hip implants with a change of vendor, 23 percent for knee implants without a change of vendor, 25 percent for shoulder implants with a change of vendor, 45 percent for arthroscopic shavers and burrs without a change of vendor, 45 percent for interference screws without a change of vendor, and 23 percent for bone-suture anchors without a change of vendor.

Conclusions: The Single Price/Case Price Purchasing Program at the Lahey Clinic allowed the hospital to reduce its cost of orthopaedic operations by lowering the cost of operating-room supplies. This cost reduction is important in a health-care economy in which hospital revenues per unit of service or care are decreasing.

Single Price/Case Price Purchasing in orthopaedic surgery : Experience at the Lahey Clinic

Background: The challenge of cost-efficiency is maintaining the quality of medical care while reducing costs and eliminating unnecessary practices. The purpose of this investigation was to evaluate the cost and effectiveness of routine pathological examination of surgical specimens from patients undergoing primary total hip or knee replacement for the treatment of osteoarthritis.

Methods: Effectiveness was assessed by comparing clinical and pathological diagnoses associated with 1234 consecutive primary total joint replacements (471 hip and 763 knee replacements) performed between 1992 and 1995 in one hospital in patients with the clinical diagnosis of osteoarthritis. Clinical and pathological diagnoses were considered concordant if they agreed, discrepant if they differed without a resultant change in patient management, and discordant if they differed with a resultant change in patient management. Cost identification was performed by determining charges, reimbursement, and costs in 1998-adjusted American dollars for both total hip and total knee replacement. The cost per health-effect was determined by calculating the cost per discrepant and discordant diagnosis.

Results: The prevalence of concordant diagnoses was 97.6 percent (1205 of 1234) (95 percent confidence interval, 96.6 to 98.4 percent), the prevalence of discrepant diagnoses was 2.3 percent (twenty-eight of 1234) (95 percent confidence interval, 1.4 to 3.1 percent), and the prevalence of discordant diagnoses was 0.1 percent (one of 1234) (95 percent confidence interval, 0.1 to 0.3 percent). The cost per discrepant diagnosis was $4383, and the cost per discordant diagnosis was $122,728.

Conclusions: Routine pathological examination of surgical specimens from patients undergoing primary total hip or knee replacement because of the clinical diagnosis of osteoarthritis had limited cost-effectiveness at our hospital due to the low prevalence of findings that altered patient management.

Cost and Effectiveness of Routine Pathological Examination of Operative Specimens Obtained During Primary Total Hip and Knee Replacement in Patients with Osteoarthritis

Background
Many hospitals require all operative specimens be sent to pathologists for routine examination. Although previous studies indicate this practice increases medical cost, it remains unclear whether it alters patient management and whether it is cost-effective.

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Histologic Examinations of Arthroplasty Specimens are not Cost-effective: A Retrospective Cohort Study

Background: It has often been hospital policy to send all resected specimens obtained during a total hip or knee arthroplasty for histological evaluation. This practice is expensive and may be unnecessary. We sought to determine the ability of surgeons to diagnose primary joint conditions correctly, and we attempted to identify any possible risks to the patient resulting from the omission of routine histological evaluation of specimens at the surgeon's discretion. Our objective was to ascertain whether routine histological evaluation could be safely omitted from the protocol for primary hip and knee arthroplasty without compromising the care of the patient. Methods: A total of 1388 consecutive arthroplasties in 1136 patients were identified from a database of primary total hip and knee arthroplasties that was prospectively maintained by the senior one of us. Follow-up data obtained at a mean of 5.5 years (range, two to ten years) were available after 92 percent (1273) of the 1388 arthroplasties. The preoperative diagnosis was determined from the history, findings on clinical examination, and radiographs. The intraoperative diagnosis was determined by gross inspection of joint fluid, articular cartilage, synovial tissue, and the cut surfaces of resected specimens. The combination of the preoperative and intraoperative diagnoses was considered to be the surgeon's clinical diagnosis. All resected specimens were sent for routine histological evaluation, and a pathological diagnosis was made. Attention was given to whether a discrepancy between the surgeon's clinical diagnosis and the pathological diagnosis altered the management of the patient. The original diagnoses were updated with use of annual radiographs and clinical assessments. The cost of histological examination of specimens obtained at arthroplasty was determined by consultation with hospital administration, accounting, and pathology department personnel. Results: A pathological fracture or an impending fracture was diagnosed preoperatively and confirmed intraoperatively during twelve of the 1388 arthroplasties. Histological analysis demonstrated malignancy in specimens obtained during eleven of these arthroplasties and evidence of a benign rheumatoid geode in the specimen obtained during the twelfth arthroplasty. The preoperative and intraoperative diagnoses made before and during the remaining 1376 arthroplasties were benign conditions, which were confirmed histologically in all patients. No diagnosis changed during the follow-up period. As demonstrated by a comparison with the histological diagnosis, the surgeon's clinical diagnosis of malignancy had a sensitivity of 100 percent (95 percent confidence interval, 74.0 to 100 percent), a specificity of 99.9 percent (95 percent confidence interval, 99.6 to 100 percent), a positive predictive value of 91.7 percent (95 percent confidence interval, 64.6 to 98.5 percent), and a negative predictive value of 100 percent (95 percent confidence interval, 99.7 to 100 percent). There was a discrepancy between the preoperative and intraoperative diagnoses associated with eleven arthroplasties. All eleven intraoperative diagnoses were correct, as confirmed histologically. Excluding the patients who had a pathological or impending fracture, the accuracy of the surgeon's preoperative diagnosis was 99.2 percent (95 percent confidence interval, 98.6 to 99.5 percent). When the intraoperative and preoperative diagnoses were combined, the accuracy was 100 percent (95 percent confidence interval, 99.7 to 100 percent). Histological evaluation at our hospital resulted in total charges, including hospital costs and professional fees, of $196.27 and a mean total reimbursement of $102.59 per evaluation. In our series of 1136 patients with 1388 arthroplasties, these costs could have been eliminated for all but the twelve patients who had a suspected malignant lesion and the one patient in whom pigmented villonodular synovitis was found. Conclusions: Benign conditions can be diagnosed accurately by an experienced surgeon. The preoperative diagnosis should be determined on the basis of a carefully obtained history, a detailed physical examination, and a thorough evaluation of radiographs. To complete the clinical diagnosis, the preoperative information should be combined with findings obtained through careful intraoperative observation of resected specimens and, in the case of hip arthroplasty, inspection of the divided femoral head. In so doing, the surgeon can usually exclude clinically the possibility of malignancy or another condition that may alter the management of the patient and thus can reserve histological analysis for situations where the diagnosis is suspect or unexpected findings are noted intraoperatively. This selective, surgeon-directed use of histological analysis can result in notable financial savings.

Trevor Lawrence

Papers

Analysis of routine histological evaluation of tissues removed during primary hip and knee arthroplasty.

Paper #17 Histology following total hip and knee arthroplasty: Expensive and expendable