Cash Prices For Orthopedic Surgery: A New Marketplace And A Bundle Of Savings

Traditional fee for service medicine has been playing mind tricks on the American public and corporate world for too long while stuffing billions of dollars into the pockets of publicly traded insurance companies, hospitals and consolidated health systems. This money is coming right out of the communities these hospitals purport to serve while putting an increasing strain on the working public and companies who provide health benefits to their employees. While insurance coverage makes it appear as though patients don’t have to pay for treatment when in reality the cost of the insurance premium has been going up as much as 12-18% year over year and an increasing share of the cost of care is being transferred to the patient through high-deductible health plans. When these out-of-pocket costs are coupled with the cost of the policy, the math often does not work out for a majority of people in terms of what they pay versus what they spend. And the current fee-for-service system is purposely designed to hide the true cost of care from patients so they cannot know the price until after they have “purchased” the care. There is no other sector of the economy that operates in such a manner that precludes the ability of patients and the companies that provide their health coverage to shop for cost savings. Because the cost of individual policies is becoming too expensive for many employers who provide health benefits to their employees, the current model is becoming a huge budgetary strain for these companies and the money that goes to pay for these benefits is indirectly coming out of potential compensation for the employees. 

In response to an increasing demand for more cost effective alternatives, a marketplace for cash prices is cropping up wherein the cost of care for a procedures, diagnostic study, office visit, lab test, imaging study etc…is known in advance and can be paid for directly without using an insurance provider to broker the payment. Cash prices are generally offered outside of large hospital systems such as by ambulatory surgery centers, private physician groups and other non-hospital owned/affiliated providers such as imaging centers. Because the administrative cost of these smaller centers is much smaller than for a hospital and because the cost of certain procedures is not being artificially inflated to subsidize the cost of other non-profitable services, much more competitive prices can be offered with no decline in the quality of care. 

Bundled payments are one method of offering cash prices for services that have a well-defined episode of care. Many orthopedic procedures such as joint replacement fall into this category where the cost of the procedure and the postoperative care is well established. This allows centers to offer bundle of services for one fixed price. For example the office consultation, x rays, surgical procedure, surgeon fee, anesthesia fee, implant fee and cost of all other durable equipment can be bundled into one price instead of 7-8 different claims. This is not only much more efficient for those writing the checks but can also lead to cost savings of 50-60% compared to traditional fee-for-service care. 

Direct employer contracting models are also progressively taking shape allowing self-insured companies to contract directly with the care team for a fixed price while avoiding the complexities of a third party insurance company or benefits broker. This marketplace is growing slowly but steadily gaining some traction in certain parts of the country. As large health systems continue to merge and consolidate and continually drive up the cost of care, solutions like cash pricing, bundled payments and direct employer contracting will become ever more popular. Platforms that connect patients, employers and providers are beginning to enter the marketplace to address the growing need for fixed-price, high quality care. 

Our practice has been a regional pioneer in bundled payments for orthopedic surgery and we can offer cash prices for a variety of orthopedic procedures that can be performed as an outpatient surgery. 

Contact us for knee, hip or shoulder replacement surgery.

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