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Big orthopedic settlement could swing pricing pendulum toward hospitals

Hospital Materials Management, September 1, 2008

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Probably for as long as surgeons have implanted artificial hips and knees, manufacturers enjoyed the enviable position of being able to set prices. Unable to fall back to the relative safety net of group purchasing contracts and finding themselves compelled to cede to surgeons’ demands for their implant product and supplier of choice, hospitals had little alternative but to pay for the implant, very often at list price.

Since such orthopedic procedures can amount to their financial lifeblood, few hospitals can risk losing a skilled, high-volume orthopedic surgeon to a competing facility should that surgeon become displeased with product selection pressure.

The scenario heavily favored the major orthopedic implant producers, which rode the wave of weak opposition for decades. But suppliers may have pushed the envelope too far when they enlisted the help of and paid millions of dollars to legions of consultants, who in reality were the very surgeons to whom they were selling, to keep the flow of favored hip and knee implants moving.

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