Exposing private hospitals’ surgery cost gap

The difference in the cost of a hip replacement between private hospitals can be as high as $43,000, a new report reveals.

Medibank, led by Craig Drummond, released the data in conjunction with the Royal Australasian College of Surgeons. Picture: Aaron Francis/The Australian.

The difference in the cost of a hip replacement between private hospitals can be as high as $43,000, a new report reveals.

Meanwhile a knee replacement can cost over $16,000 more at one private hospital than at another.

The stark difference in costs is revealed in a surgical variance report on orthopedic producers, released by Medibank and the Royal Australasian College of Surgeons.

It says that from a sample of 299 surgeons who performed at least five hip replacements, the average cost ranged between $18,309 and $61,699, with a median of $26,661.

Data collected from 394 surgeons who performed at least five knee procedures showed that the average separation cost of a surgeon ranged between $16,838 and $32,976, with a median of $22,620.

The total cost includes all charges raised by the hospital, medical practitioners, diagnostic providers and for prostheses items.

The RACS and Medibank have partnered to release a series of reports on industry statistics to drive discussion about the best ways to improve private hospital clinical outcomes and patient care.

The latest report reveals the wide range in the cost of prostheses items, an area that private insurers are pushing the government to reform.

A hip replacement X-ray.

For hip replacements, the average cost of prostheses used by a surgeon ranged between $4908 and $16,178, with a median of $10,727, the report shows. For knee replacements the range was between $5388 and $12,464, with a median of $8,193.

The orthopedic report also outlines the percentage of a surgeon’s patients that were referred to an inpatient rehabilitation program.

The report reveals substantial variation as to whether surgeons send their patients to inpatient rehabilitation. Some surgeons send none of their patients, while other surgeons send all of their patients.

For hip replacements in private hospitals, the percentage of patients transferred to rehabilitation ranges from zero per cent to 100 per cent, with a median of 29 per cent. For knee replacements the range is the same, with a median of 40 per cent.

“A referral to inpatient rehab can add more than 10 nights to the patient’s stay in hospital,” says

Andrew Wilson, Medibank’s executive general manager of provider networks and integrated care.

“Other options include attending day rehab programs at hospital, or completing rehab with a physiotherapist or occupational therapist, which enables the patient to stay at home.”

Orthopedic surgeon Lawrence Malisano, a councillor of the RACS, said the report provided an opportunity for surgeons to see where their performance stood, compared to other surgeons.

“It makes you reflect if you’re outside the range of what we consider to be a reasonable variation,” he said.

“I was surprised at the variation in costs of prostheses and there are many other things in the report that need to be analysed in the correct manner.”

But Dr Malisano cautioned against general statements on the data, saying it was important to interpret what it meant in different settings.

He said the “enormous” variation in hospitals stays when a patient is referred to inpatient rehabilitation could depend on what services are available to them outside the hospital setting.

“Data is one thing but it is interpreting what it means in different settings,” he said.

“That is why the college has set up the MOU with Medibank, which is the college has input into helping them understand what the numbers mean. It is easy to be misinterpreted and have the wrong message out there.”