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U.K. national tariff reimburses less than the actual costs for THA and TKA
NHS hospitals should base reimbursement data on actual costs, not estimates, researchers say.
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GLASGOW – The United Kingdom’s national tariff for total hip and total knee arthroplasty may underestimate the actual cost of the procedures in National Health Service hospitals.
Researchers at South West London Elective Orthopaedic Center (SWLEOC) in Epsom, England, performed a retrospective analysis of the center’s financial statements between September 2004 and December 2005.
After comparing those findings to the national tariff in 2004 to 2005 and 2005 to 2006, they found that the center’s costs for total hip arthroplasty (THA) and total knee arthroplasty (TKA) are close to the amount that the national tariff reimburses.
However, SWLEOC is a high-volume, elective-only center for primary arthroplasty with lower implant costs, lower infrastructure costs and a lower average length of stay than in typical National Health Service (NHS) trust hospitals.
“We feel that the national tariff does not reimburse adequately the costs of primary total hip or total knee, and thus trusts need to improve their data that are sent off to the Department of Health, on which the tariff is based,” said Paul D. Hamilton, of SWLEOC.
More than 90% of the operations performed at the SWLEOC are primary THA and TKAs, Hamilton said at the British Orthopaedic Association Annual Congress. Because of this, he and his colleagues could base their study on actual rather than estimated costs, such as those in the national tariff.
SWLEOC and national costs
The researchers evaluated direct costs – including preassessment, theater recovery, implant, consultant fees and ward costs – and indirect costs, including management, education, other health care professionals involved in the surgery, and all surcharges and capital charges, Hamilton said.
Hamilton and his colleagues also counted implant costs, but did not include the high dependency unit and intensive treatment unit costs, because they are not included in the national tariff.
The researchers found that during the 16-month timeframe, 93% of patients at their center underwent primary THA or TKA. Surgeons performed 1,538 TKAs and 1,118 THAs.
“For the total knee replacement on average, it costs us £6,318. Total hip replacement costs us £5,852,” Hamilton said. “Cemented total hip was slightly less at £5,454, and an uncemented total hip was £6,000.”
Compared to the national tariff, the researchers found that their costs were 2.3% below the 2004-2005 national tariff and were 1% more than the 2005-2006 national tariff. “For cemented total hips, we were 8% below the tariff in 2005 to 2006, and for uncemented total hips, we were 6.6% more than the tariff,” Hamilton said.
For knee replacements, the SWLEOC costs were 5% less than the 2004-2005 tariff and 4.2% less than the 2005-2006 tariff.
Source: Hamilton PD |
Estimates vs. actual costs
Although the SWLEOC achieved adequate reimbursement based on the national tariff, typical NHS trust hospitals may not be achieving the same reimbursement.
“We think [the national tariff] underestimates actual costs, and this is probably due to the fact that trusts aren’t sending quality data to the Department of Health,” Hamilton said. “This may be due to the fact that national trust [hospitals] work out the national tariff based on cost estimates given to them by clinical staff and not by actual costs, which is what we’ve done.”
The SWLEOC costs differ significantly from typical NHS trust hospitals because the center pays significantly lower discounted prices for implants than NHS trust hospitals, Hamilton said.
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When the researchers evaluated their findings based on the undiscounted prices, they found the implant cost was 11% above implant reimbursement for TKAs and 26% above the tariff reimbursement for THAs, according to the national tariff, Hamilton said.
In addition, the SWLEOC does not have the same infrastructure costs as a typical NHS hospital, such as: kitchens, human resources, libraries, research and development, surgical staff training or junior surgical staff and consultant secretariat salaries, he added.
Length of stay
Finally, the SWLEOC patients’ hospital stays are an average 60% less than the national average length of stay after a primary arthroplasty, Hamilton said.
In 2003 to 2004, the researchers found that their patients stayed an average 5.7 days after THA, compared to 10.4 days on the national average, and an average 6.5 days for TKA, compared to 9.5 days nationally.
For more information:
- Field R, Hamilton PD, Lemon M. The cost of total hip replacement and total knee replacement – A comparison with national tariff. #FP8. Presented at the British Orthopaedic Association Annual Congress. Sept. 27-29, 2006. Glasgow.