Report finds significant cost variations in knee and hip replacement procedures across the U.S.

Today’s healthcare consumers have an increasing thirst for information that will empower them to make informed decisions about their care. The industry is in the midst of a transformation to meet the needs and expectations of today’s technologically savvy shoppers and through that process, a key obstacle has emerged: the unpredictable variation in costs of medical services and procedures and an accompanying lack of transparency.

This issue has obvious financial consequences for individuals and employers, as well as serious implications for the sustainability of the U.S. healthcare system. To help understand the depth of the issue, the Blue Cross Blue Shield Association and Blue Health Intelligence joined together to examine cost variation in one area of care: knee and hip replacement procedures.

The findings from this collaboration are contained in the first Blue Cross Blue Shield, The Health of America Report, “A Study of Cost Variations for Knee and Hip Replacement Surgeries in the U.S.” The study, which is based on independent Blue Cross and Blue Shield companies’ claims data*, revealed the cost of those procedures varies widely in markets across the country, with extreme variations emerging even within the same market. In fact, prices for identical procedures can quadruple in cost depending on which hospital a patient chooses.

Though the average cost for a total knee replacement procedure (without complication) was $31,124 in 64 markets where claims data was reviewed, costs for the same procedure dipped as low as $11,317 in Montgomery, Alabama, and rose as high as $69,654 in New York City. Stark cost variations also exist within the same market in some cases, like in Dallas, where the cost for a total knee replacement could range from $16,772 to $61,585 depending on the hospital - a difference of 267 percent.

The average cost for a total hip replacement procedure followed similar trends. Though the average price is $30,124, the same procedure could cost $11,327 in Birmingham, Alabama, and $73,987 in Boston.  

These findings are particularly significant given the frequency with which these procedures are performed. Knee and hip replacement surgeries are among the fastest growing medical treatments in the U.S. A study published in the June 2014 issue of Journal of Bone and Joint Surgery found that the number of knee replacements more than tripled and hip replacements doubled between 1993 and 2009.

It is crucial for consumers, employers and industry leaders to have access to the tools they need to become informed shoppers when choosing where to receive medical care. As the study shows, the hospital an individual selects has a direct – and potentially significant – impact on the total cost of a procedure. Revealing insights such as those contained within the report empower consumers and employers with information that demonstrates the quality and cost of doctors and hospitals to enable them to find the highest value options for care.

To help consumers identify high quality, affordable hospitals, BCBS companies created the Blue Distinction® Centers+ designation, which recognizes hospitals that demonstrate expertise in delivering patient care safely and effectively, and are also 20 percent or more cost-efficient than non-designated facilities. There are 427 Blue Distinction® Centers+ for Knee and Hip Replacement, and they are present in the majority of the 64 markets that were studied.

The cost-variation study is the first report in the series, Blue Cross Blue Shield, The Health of America Report, a collaboration between the Blue Cross Blue Shield Association and Blue Health Intelligence that will utilize a market-leading medical claims database to uncover key trends and provide insight into healthcare dynamics.

Blue Health Intelligence is a premiere health intelligence resource, delivering data-driven insights about healthcare trends and best practices, resulting in healthier lives and more affordable access to safe and effective care.

To read the complete findings, view the full report.

* Data was analyzed based on Metropolitan Service Areas (MSAs) in accordance with Census data, which can include large population areas that may cross state lines. The Boston MSA, for example, inclubes areas within New Hampshire and Rhode Island. For more information, visit: http://www2.census.gov/geo/maps/metroarea/stcbsa_pg/Feb2013/cbsa2013_MA.pdf