Drivers of the Variation in Prosthetic Implant Purchase Prices for Total Knee and Total Hip Arthroplasties

Abstract Background Previous studies have documented wide variation in health care spending and prices; however, the causes for the variation in supply purchase prices across providers is not well understood. The purpose of this study was to determine the drivers of variation in prosthetic implant purchase prices for primary total knee and hip arthroplasties (TKA and THA, respectively) across providers. Methods We obtained retrospective data from 27 hospitals on the average prosthetic implant purchase prices for primary TKAs and THAs over the 12 months ending September 30, 2013, as well as data on a range of independent potential explanatory variables. Each hospital performed at least 200 primary total joint replacements per year. The multivariate seemingly unrelated regression approach was used to evaluate the impact of the variables on purchase price for each type of implant. Results The average purchase price at the hospital at the 90th percentile was 2.1 times higher for TKAs and 1.7 times higher for THAs than at the hospital at the 10th percentile. The use of a hospital-physician committee for implant vendor selection and negotiation was associated with 17% and 23% lower implant purchase prices (p