Why Do My Implants Cost So Much?

Why are orthopedic implants “so expensive”?

One of the most common conversations we have with hospitals and private practice physicians deals with implant pricing. More specifically, how they could pay less for the things they buy today, tomorrow, and in the future.

It’s a valid concern.

Profitability for a practice matters. You can’t serve patients well if the doors don’t stay open. Additionally, margins continue to shrink as the cost of doing business goes up and physician reimbursement comes down.

Ultimately, the price you pay for implants is based on a lot of factors and can vary greatly by situation.

That said, here are some variables to consider as you think about driving down costs.

Manufacturing Costs: This is the first and most obvious factor in determining the price at which a company is willing to sell their products. While we could cite examples where companies were willing to sell a specific product in a specific situation, for a specific reason at a loss, this can’t be standard practice. Bottom line: there is a floor to the pricing the market can offer.

Purchase Volume: Generally speaking, the bigger the purchase the greater the discount. There’s a big difference between using a product occasionally and buying something in “bulk”. Larger practices doing more procedures have more leverage when getting companies to “sharpen their pencil’. It’s like making a trip to your local car dealer. Imagine negotiating the price for a single car vs. a fleet of cars for your company. Just like other industries, volume matters.

Company Marketing/Innovation: Irrespective of industry, companies spend large sums of money to design, market, and sell products. This is true whether someone is selling cars, phones, or total knee replacements. The marketplace continues to demand innovation with regard to implants, instrumentation, and new technology. All the money companies spend on development and sales is factored into the cost you pay.

Corporate Bureaucracy: The last few decades have seen explosive growth in hospital administration and bureaucracy. Healthcare is big business and there are substantial costs associated with keeping a machine like that running. Similarly, orthopedic implant companies have followed suit. Inevitably, the cost of keeping the myriad layers of organizational structure moving forward is passed on to the consumer.

The Market: At the end of the day companies will continue to charge what the market permits them to charge. If hospitals and private practice surgeons are unwilling to consider shifting their buying practices, it substantially minimizes the opportunity for significant cost savings. The reductions in implant price will continue, but incrementally.