The USA devotes roughly $200 billion (6%) of annual national health expenditures to medical devices. A substantial proportion of this spending occurs during orthopedic (eg, hip and knee) arthroplasties – two high-volume hospital procedures. The implants used in these procedures are commonly known as physician preference items (PPIs), reflecting the physician’s choice of implant and vendor used. The foundations for this preference are not entirely clear. This study examines what implant and vendor characteristics, as evaluated by orthopedic surgeons, are associated with their preference. It also examines other factors (eg, financial relationships and vendor tenure) that may contribute to implant preference.
Physician’s preference and influence over product choice affect the prices that hospitals pay, in part by reducing the latter’s ability to standardize on a small number of vendors and obtain bulk pricing (exchange high volume for lower unit cost). Rising health care costs, technological innovations introduced during the 1990s and early 2000s (eg, bare metal and drug-eluting stents, pacemakers, and implantable cardioverter defibrillators), the emergence of nationally organized group purchasing organizations (GPOs), the advent of bundled payment, and growing attention to the hospital supply chain have highlighted these issues regarding PPIs.
Explanation of how implants affect cost of procedures