Understanding Health Economics in Spine Surgery

Does healthcare system device volume correlate with price paid for spinal implants: a cross-sectional analysis of a national purchasing database

OBJECTIVES

Amid continuously rising US healthcare costs, particularly for inpatient and surgical services, strategies to more effectively manage supply chain expenses are urgently necessary. Across industries, the 'economy of scale' principle indicates that larger purchasing volumes should correspond to lower prices due to 'bulk discounts'. Even as such advantages of scale have driven health system mergers in the USA, it is not clear whether they are being achieved, including for specialised products like surgical implants which may be more vulnerable to cost inefficiency. The objective of this observational cross-sectional study was to investigate whether purchasing volumes for spinal implants was correlated with price paid.

SETTING

USA.

PARTICIPANTS

Market data based on pricing levels for spine implants were reviewed from industry implant price databases. Filters were applied to narrow the sample to include comparable institutions based on procedural volume, patient characteristics and geographical considerations. Information on the attributes of 619 health systems representing 12 471 provider locations was derived from national databases and analytics platforms.

PRIMARY OUTCOME MEASURE

Institution-specific price index paid for spinal implants, normalised to the national average price point achieved.

RESULTS

A Spearman's correlation test indicated a weak relationship between purchasing volume and price index paid (ρ=-0.35, p<0.001). Multivariable linear regression adjusting for institutional characteristics including type of hospital, accountable care organisation status, payer-mix, geography, number of staffed beds, number of affiliated physicians and volume of patient throughput also did not exhibit a statistically significant relationship between purchasing volume and price index performance (p=0.085).

CONCLUSIONS

National supply chain data revealed that there was no significant relationship between purchasing volume and price paid by health systems for spinal implants. These findings suggest that factors other than purchasing or patient volume are responsible for setting prices paid by health systems to surgical vendors and/or larger healthcare systems are not negotiating in a way to consistently achieve optimal pricing.

Direct medical costs after surgical or nonsurgical treatment for degenerative lumbar spinal disease: A nationwide matched cohort study with a 10-year follow-up

Objective

The demand for treating degenerative lumbar spinal disease has been increasing, leading to increased utilization of medical resources. Thus, we need to understand how the budget of insurance is currently used. The objective of the present study is to overview the utilization of the National Health Insurance Service (NHIS) by providing the direct insured cost between patients receiving surgery and patients receiving nonsurgical treatment for degenerative lumbar disease.

Methods

The NHIS-National Sample Cohort was utilized to select patients with lumbar disc herniation, spinal stenosis, spondylolisthesis or spondylolysis. A matched cohort study design was used to show direct medical costs of surgery (n = 2,698) and nonsurgical (n = 2,698) cohorts. Non-surgical treatment included medication, physiotherapy, injection, and chiropractic. The monthly costs of the surgery cohort and nonsurgical cohort were presented at initial treatment, posttreatment 1, 3, 6, 9, and 12 months and yearly thereafter for 10 years.

Results

The characteristics and matching factors were well-balanced between the matched cohorts. Overall, surgery cohort spent $50.84/patient/month, while the nonsurgical cohort spent $29.34/patient/month (p<0.01). Initially, surgery treatment led to more charge to NHIS ($2,762) than nonsurgical treatment ($180.4) (p<0.01). Compared with the non-surgical cohort, the surgery cohort charged $33/month more for the first 3 months, charged less at 12 months, and charged approximately the same over the course of 10 years.

Conclusion

Surgical treatment initially led to more government reimbursement than nonsurgical treatment, but the charges during follow-up period were not different. The results of the present study should be interpreted in light of the costs of medical services, indirect costs, societal cost, quality of life and societal willingness to pay in each country. The monetary figures are implied to be actual economic costs but those in the reimbursement system instead reflect reimbursement charges from the government.