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Cost Benefit/Cost Effectiveness of MedicalTechnologies: A Case Study of Orthopedic
Joint Implants
September 1981
NTIS order #PB82-120833
—
CASE STUDY #14
THE IMPLICATIONS OF
COST-EFFECTIVENESSANALYSIS OF
MEDICAL TECHNOLOGY
SEPTEMBER 1981
BACKGROUND PAPER #2: CASE STUDIES OFMEDICAL TECHNOLOGIES
CASE STUDY #14: COST BENEFIT/COST EFFECTIVENESS OFMEDICAL TECHNOLOGIES: A CASE STUDY OF
ORTHOPEDIC JOINT IMPLANTS
Judith D. Bentkover, Ph. D.
and
Philip G. Drew, Ph. D.
Arthur D. Little, Inc., Cambridge, Mass.
OTA Background Papers are documents that contain information believed to beuseful to various parties. The information undergirds formal OTA assessments or isan outcome of internal exploratory planning and evaluation, The material is usuallynot of immediate policy interest such as is contained in an OTA Report or TechnicalMemorandum, nor does it present options for Congress to consider.
Library of Congress Catalog Card Number 80-600161
For sale by the Superintendent of Documents,U.S. Government Printing Office, Washington, D.C. 20402
Foreword
This case study is one of 17 studies comprising Background Paper #2 for OTA’sassessment, The Implications of Cost-Effectiveness Analysis of Medical Technology.That assessment analyzes the feasibility, implications, and value of using cost-effec-tiveness and cost-benefit analysis (CEA/CBA) in health care decisionmaking. The ma-jor, policy-oriented report of the assessment was published in August 1980. In additionto Background Paper #2, there are four other background papers being published inconjunction with the assessment: 1) a document which addresses methodologicalissues and reviews the CEA/CBA literature, published in September 1980; 2 ) a casestudy of the efficacy and cost-effectiveness of psychotherapy, published in October1980; 3) a case study of four common diagnostic X-ray procedures, to be published insummer 1981; and 4) a review of international experience in managing medical tech-nology, published in October 1980. Another related report was published inSeptember of 1979: A Review of Selected Federal Vaccine and Immunization Policies.
The case studies in Background Paper #2: Case Studies of Medical Technologiesare being published individually. They were commissioned by OTA both to provideinformation on the specific technologies and to gain lessons that could be applied tothe broader policy aspects of the use of CEA/CBA. Several of the studies were specifi-cally requested by the Senate Committee on Finance.
Drafts of each case study were reviewed by OTA staff; by members of the ad-visory panel to the overall assessment, chaired by Dr. John Hogness; by members ofthe Health Program Advisory Committee, chaired by Dr. Frederick Robbins; and bynumerous other experts in clinical medicine, health policy, Government, and econom-ics. We are grateful for their assistance. However, responsibility for the case studies re-mains with the authors.
Director
Advisory Panel on The Implications ofCost= Effectiveness Analysis of Medical Technology
John R. Hogness, Panel ChairmanPresident, Association of Academic Health Centers
Stuart H. AltmanDeanFlorence Heller SchoolBrandeis University
James L. BenningtonChairmanDepartment of Anatomic Pathology and
Clinical LaboratoriesChildren Hospital of San Francisco
John D. ChaseAssociate Dean for Clinical AffairsUniversity of Washington School of Medicine
Joseph FletcherVisiting ScholarMedical EthicsSchool of MedicineUniversity of Virginia
Clark C. HavighurstProfessor of LawSchool of LawDuke University
Sheldon LeonardManagerRegulatory AffairsGeneral Electric Co.
Barbara J. McNeilDepartment of RadiologyPeter Bent Brigham Hospital
Robert H. MoserExecutive Vice PresidentAmerican College of Physicians
Frederick MostellerChairmanDepartment of BiostatisticsHarvard University
Robert M. SigmondAdvisor on Hospital AffairsBlue Cross and Blue Shield Associations
Jane Sisk WillemsVA ScholarVeterans Administration
OTA Staff for Background Paper #2
Joyce C. Lashof, Assistant Director, 0TAHealth and Life Sciences Division
H. David Banta, Health Program Manager
Clyde J. Behney, Project Director
Kerry Britten Kemp, * EditorVirginia Cwalina, Research Assistant
Shirley Ann Gayheart, SecretaryNancy L. Kenney, Secretary
Martha Finney, * Assistant Editor
Other Contributing Staff
Bryan R. Luce Lawrence Miike Michael A. RiddioughLeonard Saxe Chester Strobel*
OTA Publishing Staff
John C. Holmes, Publishing Officer
John Bergling Kathie S. Boss Debra M. Datcher Joe Henson
● OTA contract personnel.
Preface
This case study is one of 17Background Paper #2 to the OTA
that compriseproject on the
Implications of Cost-Effectiveness Analysis o fMedical Technology. * The overall project wasrequested by the Senate Committee on Laborand Human Resources. In a]], 19 case studies oftechnological applications were commissionedas part of that project. Three 01 the 19 were spe-cifically requested by the Senate Committee onFinance: psychotherapy, which was issued sepa-rately as Background Paper #3; diagnostic X-ray, which will be issued as Background Paper#.5; and respiratory therapies, which will be in-cluded as part of this series. The other 16 casestudies were selected by OTA staff.
In order to select those 16 case studies, OTA,i n consultation with the advisory panel to theoverall project, developed a set of selectioncriteria. Those criteria were designed to ensurethat
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as a group the case studies would provide:
examples of types of technologies by func-tion (preventive, diagnostic, therapeutic,and rehabilitative );examples of types of technologies by physi-cal nature (drugs, devices, and procedures);examples of technologies in different stagesof development and diffusion (new, emerg-ing, and established );examples from different areas of medicine(such as general medical practice, pedi-atrics, radiology, and surgery);examples addressing medical problems thatare important because of their high fre-quency or significant impacts (such ascost ) ;examples of technologies with associatedhigh costs either because of high volume(for low-cost technologies) or high individ-ual costs;examples that could provide informative.material relating to the broader policy andmethodological issues of cost-effectivenessor cost-benefit analysis (CEA/CBA); and
● examples with sufficient evaluable litera-ture.
On the basis of these criteria and recommen-dations by panel members and o t her experts,OTA staff selected the other case studies. These16 plus the respiratory therapy case study re-quested by the Finance Committee make up the17 studies in this background paper.
All case studies were commissioned by OTAand performed under contract by experts in aca-demia. They are authored studies. OTA sub-jected each case study to an extensive reviewprocess. Initial drafts of cases were reviewed byOTA staff and by members of the advisorypanel to the project. Comments were providedto authors, along with OTA’s suggestions forrevisions. Subsequent drafts were sent by OTAto numerous experts for review and comment.Each case was seen by at least 20, and some by40 or more, outside reviewers. These reviewerswere from relevant Government agencies, pro-fessional societies, consumer and public interestgroups, medical practice, and academic med-icine. Academicians such as economists and de-cision analysts also reviewed the cases. In all,over 400 separate individuals or organizationsreviewed one or more case studies. Although allthese reviewers cannot be acknowledged indi-vidually, OTA is very grateful for their com-ments and advice. In addition, the authors ofthe case studies themselves often sent drafts toreviewers and incorporated their comments.
These case studies are authored workscommissioned by OTA. The authors are re-sponsible for the conclusions of their spe-cific case study. These cases are not state-ments of official OTA position. OTA doesnot make recommendations or endorse par-ticular technologies. During the variousstages of the review and revision process,therefore, OTA encouraged the authors topresent balanced information and to recog-nize divergent points of view. In two cases,OTA decided that in order to more fullypresent divergent views on particular tech-nologies a commentary should be added tothe case study. Thus, following the case
studies on gastrointestinal endoscopy andon the Keyes technique for periodontal dis-ease, commentaries from experts in the ap-
propriate health care specialty have beenincluded, followed by responses from theauthors.
The case studies were selected and designed tofulfill two functions. The first, and primary,purpose was to provide OTA with specific in-formation that could be used in formulatinggeneral conclusions regarding the feasibility andimplications of applying CEA/CBA in healthcare. By examining the 19 cases as a group andlooking for common problems or strengths inthe techniques of CEA/CBA, OTA was able tobetter analyze the potential contribution thatthese techniques might make to the managementof medical technologies and health care costsand quality. The second function of the caseswas to provide useful information on the spe-cific technologies covered, However, this wasnot the major intent of the cases, and theyshould not be regarded as complete and defini-tive studies of the individual technologies. Inmany instances. the case studies do represent ex-cellent reviews of the literature pertaining to thespecific technologies and as such can stand ontheir own as a useful contribution to the field. Ingeneral, though, the design and the fundinglevels of these case studies were such that theyshould be read primarily in the context of theoverall OTA project on CEA/CBA in healthcare.
Some of the case studies are forma] CEAs orCBAs; most are not. Some are primarily con-cerned with analysis of costs; others are moreconcerned with analysis of efficacy or effec-tiveness. Some, such as the study on end-stagerenal disease, examine the role that formalanalysis of costs and benefits can play in policyformulation. Others, such as the one on breastcancer surgery, illustrate how influences otherthan costs can determine the patterns of use of atechnology. In other words, each looks at eval-uation of the costs and the benefits of medicaltechnologies from a slightly different perspec-
tive. The reader is encouraged to read this studyin the context of the overall assessment’s objec-tives in order to gain a feeling for the potentialrole that CEA/CBA can or cannot play in healthcare and to better understand the difficulties andcomplexities involved in applying CEA/CBA tospecific medical technologies.
The 17 case studies comprising BackgroundPaper #2 (short titles) and their authors are:
Artificial Heart: Deborah P. Lubeck and John P.Bunker
Automated Multichannel Chemistry Analyzers:Milton C. Weinstein and Laurie A. Pearlman
Bone Marrow Transplants: Stuart O. Schweitz-er and C. C. Scalzi
Breast Cancer Surgery: Karen Schachter andDuncan Neuhauser
Cardiac Radionuclide Imaging: William B.Stason and Eric Fortess
Cervical Cancer Screening: Bryan R. LuceCimetidine and Peptic Ulcer Disease: Harvey V.
Fineberg and Laurie A. PearlmanColon Cancer Screening: David M. EddyCT Scanning: Judith L. WagnerElective Hysterectomy: Carol Korenbrot, Ann
B. Flood, Michael Higgins, Noralou Roos,and John P. Bunker
End-Stage Renal Disease: Richard A. RettigGastrointestinal Endoscopy: Jonathan A. Show-
stack and Steven A. SchroederNeonatal Intensive Care: Peter Budetti, Peggy
McManus, Nancy Barrand, and Lu AnnHeinen
Nurse Practitioners: Lauren LeRoy and SharonSolkowitz
Orthopedic Joint Prosthetic Implants: Judith D.Bentkover and Philip G. Drew
Periodontal Disease Interventions: Richard M.Scheffler and Sheldon Rovin
Selected Respirator- y Therapies: Richard M.Scheffler and Morgan Delaney
These studies will be available for sale by theSuperintendent of Documents, U.S. Govern-ment Printing Office, Washington, D.C. 20402.Call OTA’s Publishin g Office (224-8996) foravailability and ordering information.
Case Study #14
Cost Benefit/Cost Effectiveness ofMedical Technologies: A Case Study of
Orthopedic Joint Implants
Judith D. Bentkover, Ph. D.
and
Philip G. Drew, Ph.D.
Arthur D. Little, Inc.Cambridge, Mass.
AUTHORS’ ACKNOWLEDGMENT
The authors would like to thank Don Shepard at Harvard University for hishelpful comments on earlier drafts of this case study.
Contents
PageStatement of Purpose, Scope, and Approach . . . . . . . . . . . . . , . . . . . . . . .”. . . . . . 3
4479
1113
1515
15
16
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,. .. : -- ;.-. Technical Feasibility of CEA/CBA of Orthopedic Joint Implants . . . . . . . . . . . . . .
-I -i- >.*.: .*., . . .;&.-.: s. ~“:. . .. - ., ,... .
Overview of Orthopedic Joint Implant Technology. .’. . . . . . . . . . . . . . . . . . .Identification of the Target Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Specification of an Analytical Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . .Identification and Quantification of Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . .Determination of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Usefulness of CEA/CBA of Orthopedic Joint Implants . . . . . . . . . . . . . . . . . . . . .Present Policy Formulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Effect of Limitations and Constraints of CEA/CBA on Its Usefulness in
Public Policy Formulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Feasibility of Expanding and Integrating the Use of CEA/CBA in
Public Policy Formulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Useful Directions for Future Policy Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .’. . .
LIST OF TABLES .-Table No. Pagel. Types of Joint Implant Prostheses . . . . . . . ... ... ... ... ... ... ,.. ... .$... ~2. Profile of the Orthopedic Joint Implant Industry . . . . . . . . . . . . . . . . . . . . . . . . 7
LIST OF FIGURESFigure No, Page,l. Location of Hip and Knee Prostheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42. Detail of Hip Prosthesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53. Detail of Knee Prosthesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
.,. .,
Case Study #14:
Cost Benefit/Cost Effectiveness ofMedical Technologies: A Case Study of
Orthopedic Joint Implants
Judith D. Bentkover, Ph. D.
and
Philip G. Drew, Ph. D.
Arthur D. Little, Inc.Cambridge, Mass.
STATEMENT OF PURPOSE, SCOPE, AND APPROACH
The purpose of this study is the assessment ofthe feasibility and potential usefulness of under-taking cost-effectiveness/cost-benefit analysis(CEA/CBA) of orthopedic joint prostheses. Thetwo specific questions that we address are thefollowing:
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Is it feasible to carefully and completelyevaluate the orthopedic joint implant tech-nology within a CEA/CBA framework?How could such an evaluation be useful informulating public policy (e.g., regardingreimbursement practices, research and de-velopment funding, safety and efficacy reg-ulation, capital controls, and medical man-power distribution)?
To investigate these issues, we first examinetechnical feasibility by surveying what is knownabout orthopedic joint implants and identifyingwhat must be ascertained in order to apply aCEA/CBA framework. We gauge technical fea-sibility by examining answers to the followingquestions:
● Is it possible to describe the present state oforthopedic joint implant technology?
● Is it possible to define the target popula-tion?
● Is it possible to identify and quantify thecosts associated with the diffusion of this
technology?● Is it possible to determine (and quantify, in
the case of CBA) the benefits associatedwith the diffusion of this technology?
● What are the limitations and constraints ofCEA/CBA of orthopedic joint implants?
Next, we investigate the issue of usefulness ofCEA/CBA of orthopedic joint implants. Theanalysis of this issue answers questions such asthe following:
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How are policies regarding orthopedic joint ,implants currently developed?How do the limitations and constraints ofCEA/CBA affect its use in the formulationof public policy directed towards ortho-pedic joint implants?In view of the answers to the foregoingquestions, what is the feasibility of expand-ing and integrating the use of CEA/CBA oforthopedic joint implant technology in ex-isting public policy decisionmaking sys-tems?
Finally, we identify useful directions for fu-ture policy research efforts.
Our approach to investigating the topicslisted above included a review of the literature,personal communication with selected medical
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4 ● Background Paper #2: Case Studies of Medical Technologies
specialists with relevant experience, and conver- include this information, because it provides in-sations with representatives of the orthopedic teresting and valuable insight and obviouslyprosthesis industry. Although our foci were the supports our conclusions regarding feasibility.feasibility and potential usefulness of CEA/ We recognize, however, that the result is a cer-CBA of orthopedic joint implants, our efforts tain implied emphasis on topics for which in-often resulted in our answering specific ques- formation is readily available. Therefore, wetions that in themselves are components of a caution the reader to keep this in mind.CEA/CBA study. In discussing our results, we
TECHNICAL FEASIBILITY OF CEA/CBA OFORTHOPEDIC JOINT IMPLANTS
Overview of Orthopedic JointImplant Technology
The current state of the art and the chron-ological development of orthopedic joint im-plant technology are well documented and ex-tensively described in the literature. Consideredas an entity, orthopedic joint implant technol-ogy is thought to be fairly well developed.Specific prostheses and implant proceduresassociated with some joints (e.g., hips), how-ever, are more advanced than others (e.g.,elbows). The salient features of orthopedic jointimplant technology and the history of its devel-opment are briefly reviewed below.
Description of the Technology
Orthopedic joint implants replace with ar-tificial components one or more of the essentialelements of a joint— namely, the two ends of thearticulating bones and the antifriction pad be-tween them. Muscles, tendons, and ligamentsare attached to various remaining natural struc-tures, so that the joint can function with onlyminor restrictions. Figure 1 shows the locationof hip and knee prostheses. Sketches of artificialhip and knee joints appear in figures 2 and 3,respective y.
At the time of this writing, the Food and DrugAdministration’s (FDA) Orthopedic Panel hasidentified 28 types of orthopedic implants (seetable 1). Depending on their complexity andpotential for doing harm, medical devices areclassified into one of three groups:
Class 1: Those requiring only general con-trols (e.g., adherence to good man-
Figure 1.— Location of Hip and Knee Prostheses
Hip prosthesis
— Knee prosthesis
SOURCE: Scientific American, January 1978.
Figure 2.—Detail of Hip ProsthesisClass II:
/Pelvic bone
/ Class III:
ufacturing practices.Those subject to performancestandards.Those requiring premarket approv-
i al from FDA in the manner ofdrugs.
SOURCE Arthur D Little, Inc
which is often severe, unremitting, and incapac-itating, and to restore function of a joint im-paired by various kinds of arthritis, bone dis-ease, or trauma.
History of the Technology
The modern era of orthopedic joint prosthe-ses began in 1962
Figure 3.— Detail of Knee Prosthesis
in England. In that year, Sir
SOURCE Sc/errf/flc Arnerlcan, January 1978
Table 1 .—Types of Joint Implant Prostheses———.———-.—
Ankle, 2-part metal on plastic articulation,semiconstrained carpal
Diaphysis, customElbow, constrainedElbow, nonconstrained, unipolarElbow, semiconstrainedFinger and toeHip, met stem-ceramic self-locking ball-ceramic or PE cupHip, acetabular component, metal cementedHip, acetabular component, nonpolyethyleneHip, acetabular meshHip, cement restrictorHip, femoral component, cemented, metalHip, 4-part plastic-metal-plastic-metal, trunnion bearing
typeKnee, constrained (metal-polyethylene)Knee, hinged (metal-metal)Knee, metallic plateauKnee, mold arthroplastyKnee, nonconstrained (metal-polyethylene)Patellar (metal)Posterior patellar surface, plasticShoulderTendon, passiveUpper femoralUpper humeralWrist, polysiloxaneWrist, 2-part metal-plastic articulation, semiconstrainedWrist, 3-part metal-plastic-metal articulation,
semi constrained
SOURCE Ar!hu; D Little lnc Cam b;ldge, Mass 1980
John Charnley introduced techniques for totalhip replacement using a metal component in-serted in the medulla of the femur and a poly-ethylene cup replacing the acetabulum or fe-moral socket. Both components were held inplace with methyl methacrylate, which behavesas a cement and distributor of stresses.
Since 1962, the hip replacement operation hasundergone considerable development. In addi-tion to the use of new materials, modified de-signs, and different techniques, there has been arefinement of the indications for the operation.There has also been a proliferation of ortho-pedic surgeons trained in the technique. Until1971, hip implantations performed in the UnitedStates were largely experimental and done onlyin teaching centers. However, after FDA re-leased methyl methacrylate as an acceptablesubstance in this application, the number of hipimplantations performed annually increasedabout 20 percent per year. Currently, it isestimated, at least 100,000 total hip replace-
ments are done in the United States each year,many of them at community hospitals (2).
Stimulated by the success of the hip opera-tion, orthopedic surgeons and engineers haverecently addressed replacement of other jointswith similar prosthetic devices. They have metwith considerable success in the use of kneeprostheses in the past 5 years or so, and it isestimated that perhaps 50,000 knee replace-ments are now done annually in the UnitedStates (2). Prostheses for the elbow, shoulder,wrist, fingers, and toes exist, but replacementsof these joints are much less common (12,000per year) than those of the hip or the knee,partly because the afflictions they relieve aremuch less debilitating than those of the hip orknee (33).
As the oldest and most common orthopedicjoint operation, hip replacement is the mostcompletely characterized. There is voluminousliterature discussing several attributes of the hipoperation, including comparisons of material,mechanical design, indications, contraindica-tions, epidemiology, costs, success rates, failuremodes, failure rates, techniques, etc. The tech-niques and results of the operation are stillvigorously discussed, but it is widely agreedthat total hip replacements done by skilledsurgeons in properly equipped facilities onproperly selected patients have a high (85 to 90percent) probability of success in relieving painand restoring the hip to full functional capacityfor the normal activities of middle-aged andelderly adults.
Although Charnley’s original approach to hipimplantation has remained, various improve-ments in details of design have been made.These include the use of other metals (e.g.,cobalt steel and titanium) in place of stainlesssteel and other polymers for the joint. Tech-niques used to prepare bones for prostheseshave been the subject of considerable experi-mentation. Methods for avoiding complicationshave been developed as complications havebeen discovered. In the early days, infectionrates sometimes ran as high as 10 percent, Now,however, through the strict adherence to sterileprocedures, infection rates, at least in somecenters, have been held to 1 percent. There is
some hope that impregnating the methylmethacrylate with antibiotics such as gen-tamycin can reduce infections still further. Thistechnique is used in Europe, but FDA has notyet approved it for use in the United States.Techniques to prevent loosening of implantshave been explored, but loosening remainsthe most common failure, Though sometimesasymptomatic, such loosening is believed to bethe precursor to most mechanical failures. Me-chanical failures have been reduced through bet-ter engineering design of prostheses.
Arriving at the current state of knowledgeabout hip implants has required considerableexperimentation and experience. Some of thishas been supported by Federal agencies such asFDA and the National Institutes of Health (NIH)in the United States and similar agenciesabroad. Much of it, however, has been under-taken at the initiative of orthopedic surgeonsand biomedical engineers in academic settingsand elsewhere. Approximately nine commercialfirms in the United States supply the parts andinstruments used in hip implant surgery (seetable 2). These firms have contributed some ofthe knowledge concerning materials, manufac-turing, and finishing. In particular, industry hasbeen responsible for developing manufacturingtechniques for these devices. 1
The state of knowledge about joint prosthesesother than hip is relatively less advanced. Kneeimplants are the second most common type, butless experience has been accumulated with thesethan with hip implants. Furthermore, failures ofknee implants are more frequent, in part be-cause the mechanics of the knee are more com-plicated than those of the hip. (There are nowover 80 different knee designs, indicating thatthe field is by no means so well established asthat for hips. ) Prostheses for other joints (e.g.,finger, toe) are much less common, and rela-tively little clinical experience with them hasbeen gained.
———1 Design of orthopedic prostheses is something of an art, since
their engineering properties, in terms of the forces to which theywill be subjected and the stresses they will impart to adjacent boneand ligament, are somewhat unpredictable. For this reason,various orthopedic surgeons have created their own designs: suc-cessful designs, associated with the surgeon’s name, are often thebasis of a manufacturer’s product line.
Table 2.— Profile of the OrthopedicJoint Implant Industry
Estimated sales of jointimplants in the United
States in 1980Company ($ millions)
Zimmer(owned by Bristol Meyers) . . . . . . . . $45Howmedica (owned by Pfizer) . . . . . . . . . . . . 35DePuy (owned by Biodynamics) . . . . . . . . . . 12Richards (owned by Rorer). . . . . . . . . . . . . . . 5Dow Corning Wright (owned by
Dow Corning). . . . . . . . . . . . . . . . . . . . . . . 4Cintor(owned by J & J). . . . . . . . . . . . . . . . . . 3Orthopedic Equipment Co. . . . . . . . . . . . . . . 33M (Minnesota Mining and Manufacturing) . 2U.S. Surgical Corp. . . . . . . . . . . . . . . . . . . . . . 1All others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Total . . . . . . . . . . . . . . . . . . . . ... ... .. .$114
SOURCE Arthur D Little, Inc , Cambridge, Mass , 1980
In general, orthopedic joint implant technol-ogy can be characterized as being relatively ma-ture. Fairly detailed literature pertaining both tothe nature of the operations and the originaldevelopment of the technique of joint replace-ment is available.
Orthopedic joint implant technology may il-lustrate many of the features of applying CEA/CBA to a rehabilitative technology (e.g., targetpopulation, nature of the benefits, public policyimplications). Nevertheless, it is important toremember that orthopedic joint implant tech-nology includes a variety of procedures atvarious stages of development. In this casestudy, an attempt is made to provide general in-formation about orthopedic joint implants;where it is necessary to illustrate a specificpoint, the appropriate specific prosthesis or setof prostheses is discussed. Since the focus of thestudy is on issues inherent in the application ofCEA/CBA to orthopedic joint implant technol-ogy, no attempt is made to analyze exhaustivelythe technology associated with the implant ofany single limb.
Identification of the Target Population
Aggregate Data
The literature and readily accessible aggregatedata do not reveal the orthopedic joint implanttarget population per se. As discussed below,
8 . Background Paper #2: Case Studies of Medical Technologies
however, there are data that permit pertinentinferences.
Orthopedic joint implants are used to relievevarious arthritic conditions, so the prevalenceof arthritis and rheumatism provide an upperlimit to the number of persons who could becandidates for joint replacement. Orthopedicjoint implant procedures are major operations,carrying some risk of mortality or aggravatedmorbidity, however, so it is not likely that per-sons with mild arthritic conditions or arthritis ofjoints that does not create significant impair-ment would undergo surgery.
According to the National Health InterviewSurvey (46) of the National Center for HealthStatistics (NCHS), the number of people withlimitation of activities due to chronic arthritisand rheumatism in the United States in 1974 was4,500,000. Of these individuals, 800,000 suf-fered limitation of activities other than majoractivity; 2,600,000 suffered l imitation inamount or kind of major activity; and 1,100,000were unable to carry on their major activity.Individuals with arthritis and rheumatism ac-count for 15 percent of all persons with activitylimitation and 16 percent of all persons unableto perform their major activities.
Among individuals 65. years and over, ar-thritic and rheumatic conditions account for 23percent of all persons with limitation of activity.They are the second leading cause of activity“limitation, exceeded only by heart conditions(24 percent). Among white persons, the sametrend is apparent. Arthritic and rheumatic con-ditions are the second leading cause of activitylimitation (15 percent), exceeded only by heartconditions (16 percent). Among nonwhites, ar-thritis and rheumatism account for 17 percent ofpersons with activity limitation. These condi-tions are more debilitating among nonwhitesthan they are among whites.
Thus, arthritis and rheumatism are leadingcauses of activity limitation for both a substan-tial proportion of the population-at-large andseveral specific population cohorts. As the pop-ulation ages, the number of persons limited inactivity by arthritis and rheumatism can be ex-pected to increase.
Disaggregate Data
The literature and existing disaggregate dataare disappointing in that the target populationsfor specific types of orthopedic joint implantsare not explicitly identified. However, futuredefinition of relevant population cohorts maybe possible by considering the indications andcontraindications for joint implant surgery vis-a-vis discharge abstract data containing diag-nostic information. Indications and contrain-dications are briefly reviewed below.
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Indications. —The principal conditionsamenable to joint replacement are osteo-arthritis, rheumatoid arthritis,” ankylosingspondylitis, other arthropathies, and se-quelae of trauma, neoplastic destruction,and other pathology of the joints. Pain isusually the primary reason for operating,but limited range of motion and gait dis-turbances may also be important. There isobviously room for judgment about the de-gree of pain or limits of motion as indica-tions for the operation.Contraindications. —Existing infection ofthe joint is generally a contraindication,though some success has been reportedabroad with gentamycin-impregnated ce-ment. Excessive damage may make successimprobable, as in the case when osteoporo-sis has progressed too far for the bones tohold the prosthesis reliably. The presenceof other disease making it. difficult for thepatient to withstand a major operation mayalso be a contraindication.
Data on the Frequency ofJoint Implant Operations
Additional insight into the identification oftarget populations is provided by data depicting
the frequency of previous implant operations.The frequency of joint implant operations hasbeen estimated to be 100,000 hip replacementsper year, 50,000 knee replacements, and 12,000replacements of other joints (2).
A review of the literature on orthopedic jointimplants reveals that the total number of jointreplacement procedures performed annually inthe United States has never been reported. How-
ever, to compute an estimate of this number,data can be obtained from a number of sourcesand then aggregated.
The Office of Research and Statistics, Divi-sion of Health Insurance Studies, Health CareFinancing Administration (HCFA), has statisticsconsisting of a 20-percent sample of medicarerecipients who were discharged from a short-stay hospital (a hospital where the averagelength of stay is 30 days or less). These data in-dicate when an orthopedic joint implant proce-dure was the major surgical procedure beingperformed. By multiplying the number of ortho-pedic joint implants derived from these data bya factor of five, one can produce an estimate ofthe total number of operations for patients 65and over.
The number of artificial hip implants for pa-tients of various ages is available for a sample(33 to 42 percent, depending on the year) of U.S.hospitals from the Commission on Professionaland Hospital Activities (CPHA) in Ann Arbor,Mich. These data can be extrapolated to na-tional totals by multiplying the published Pro-fessional Activities Survey (PAS) data by the re-ciprocal of the percentage of the national totalof patient discharges that PAS hospitals con-stitute. Then, the ratio between patients of allages receiving total hip implants v. patientsolder than 65 receiving these implants can bederived. The estimated total of patients age 65and over (as calculated above) can be multipliedby this ratio in order to compute the estimatedtotal number of patients receiving total hip im-plants. Unfortunately, since PAS data do notidentify implant procedures for joints other thanthe hip, it is not possible to estimate the fre-quency of all orthopedic joint implants in thesame manner.
The number of artificial hip implants per-formed in Veterans Administration (VA) hos-pitals can be obtained from the VA central of-fice and added to the medicare total to give anestimate of the national total of hip implantseach year. To the extent that patients eligible forbut not taking advantage of medicare are not in-cluded, this total is likely to slightly under-estimate the actual total.
Prior to 1971, the cement methyl methacry-late was regulated by FDA as an investigationalnew drug, so all cases in which it was used werereported to FDA, and there was an accurate rec-ord of the frequency of implant procedures.Since that time, however, the amount of report-ing has not been growing rapidly, although theliterature reveals that the number of operationson hips and knees has. According to industrysources, in 1978, some 200,000 prostheses weresold annually.
At present, there are about 11,000 board-certified orthopedic surgeons in the UnitedStates. As this number increases (and ortho-pedic joint implants remain the most efficaciouslong-run means of alleviating the limitations im-posed by arthritis), the frequency of orthopedicjoint implants and perhaps the number of per-sons comprising the target population may in-crease. Also, as the prostheses and surgery be-come more refined, the number of contraindica-tions may diminish and similarly promote alarger target population.
The Emergency Care Research Institute, inPhiladelphia, is about to complete a study forFDA based on a survey of experience at approx-imately nine representative hospitals. Thisstudy will provide additional data on the fre-quency with which joint implant procedures areundertaken.
Specification ofan Analytical Framework
CEA and CBA are both useful, widely appliedanalytical techniques, but CEA is more amen-able than CBA to assessing the technology of or-thopedic joint implants. There are two reasons.First, although both these techniques require theidentification and quantification of costs, onlyCBA necessitates placing a value on the benefitsassociated with the reduction in pain, suffering,and impairment—the improvement in quality oflife—for a predominantly nonworking popula-tion. Second, CBA usually involves the consid-eration of systemwide effects. Thus, for exam-ple, CBA would require assigning value to theeffect on the economy of having a less impaired,older population.
Although economists have long been consid-ering the problems associated with the valuationof these benefits in connection with CBA andother analyses, to date, no solutions have beendeveloped. In this section, therefore, we developa cost-effectiveness analytical framework withinwhich the technology of orthopedic joint im-plants can be assessed in accordance with thepresent state of knowledge. (For the sake ofcompleteness, benefits are described, althoughnot quantified, in a subsequent section. )
Cost-effectiveness ratios (C/E) for orthopedicjoint implants, expressing the net medical ex-penditure per year of healthy life gained by anindividual undergoing an orthopedic joint im-plant procedure, can be computed with the fol-lowing formula:
C/E = ( Co j i – Ca + C c)/(Em – Ec)where:C/E = net cost-effectiveness ratioc ““0j i = costs associated with orthopedic joint implant
proceduresC a = costs associated with the treatment of arthritic
and other individuals that would be preventedby orthopedic joint implant procedures
Cc = costs associated with the treatment of complica-tions of orthopedic joint implant procedures
E m . quality-adjusted life years of morbidity preventedby orthopedic joint implant procedures
Ec = quality-adjusted life years of morbidity and mor-tality associated with complications of ortho-pedic joint implant procedures
Separate cost-effectiveness ratios can be cal-culated for different types of orthopedic jointimplants and for population cohorts of variousages as bases for evaluating alternative coursesof action in relation to investment in differentresearch projects and reimbursement policyformulation.
The cos t -e f fec t iveness ra t ios tha t a regenerated by using the equation cited above de-pend on the assumptions that are made aboutthe value of several cost and effectivenessvariables. Note, for example, that the effects oforthopedic joint implants are expressed ina single-index, quality-adjusted life years(QALYs).2 To compute QALYs, different dis-
2QALYs were developed by Zeckhauser and Shepard (72) andhave been used in much subsequ,mt public policy research.
ability/impairment states are assigned rankingsalong a continuum which ranges from death, onthe one extreme, to full functioning, on theother. The measure of net effectiveness in theequation above incorporates both the notion ofthe expected gains associated with increasedfunctional status and the concept of potentialrisk. The determination of weights or variousvalues for different disability states poses aproblem for the researcher, Another problemassociated with the use of QALYs are thedistributional effects implied by attributing thesame value to years of disability-free life gainedby individuals of different ages. Obviously,younger persons would necessarily have bettercost-effectiveness ratios than older persons.
Both of these problems have been discussed inthe literature, and solutions, albeit imperfectones, can be found there. Weighings for dif-ferent health states were derived by Bush, Chen,and Patrick (13) and used by OTA (48). Shep-herd (60) and Larson (36) designed methods forassessing the results of hip surgery. The Shep-herd system is difficult to use because it does notintegrate function with motion and does notassign a single overall value; thus, interpersonaland intertemporal comparisons are difficult.The Larson system yields a single value, but hasbeen criticized as lacking sensitivity y.
Another weighting scheme to evaluate theresults of hip implants integrates pain, function,range of motion, and the absence of deformitywas developed by Harris (30). This method,which integrates pain, function, range of mo-tion, and the absence of deformity, has much in-tuitive appeal and is likely to be adaptable to theanalysis of the results of other orthopedic jointimplant procedures. On the premise that painand functional capacity constitute the indi-cations for surgery in the vast majority of pa-tients, Harris devised a point scale with fourcategories and a maximum of 100 points: pain(44 points), function (47 points), range of mo-tion (5 points), absence of deformity (4 points).
Within each category, gradations are possi-ble. Thus, for example, “slight” pain (defined as“occasional ache or awareness of pain of lowgrade, no compromise of activities”) is allotted40 points; “marked” pain (described as severe at
times, but not precluding ambulation) is allotted10 points. Similarly, function is broken downinto two series: daily activities (14 points) andgait (33 points). Motion is described in ac-cordance with an index based on preference andvalue; based on the assumption that the first 450arc of flexion is of more value than the arc from900 to 130
0, the former receives a higher indexvalue. Finally, the 4 points given for the absenceof deformity are all eliminated in accordancewith a set of predetermined criteria (e.g., per-manent flexion contracture greater than 300,fixed adduction of more than 10 O).
Further research might incorporate anothersimilar benefit measure, the sickness impactprofile (SIP), a health status indicator reflectingsocial interaction, ambulation, sleep, nutrition,usual daily work, household management, mo-bility, body movement, communication activi-ty, leisure, intellectual functioning, family inter-action, emotions, and personal hygiene (8). Theuse of the SIP measure would have to be under-taken via surveys in order to assess the benefitsof orthopedic joint implant patients.
Identification and Quantificationof costs
As is fairly common in economic cost studies,it is useful to classify costs associated with thediffusion of orthopedic joint implants into twocategories: direct and indirect.
Direct Costs
Direct costs include expenditures for materi-als and services associated with orthopedic jointimplants. Since specific data quantifying thetotal direct costs of various types of orthopedicjoint implants do not exist in a convenient for-mat, one would probably employ a “bottom-U P” (aggregative) approach to estimate thesecosts. 3
‘The other method used in estimating the direct costs, the “top-down” (disaggregative) approach, begins with aggregate totalexpenditure estimates by type of expenditures (e. g., hospital,physicians’ services). For each type of expenditure, the total is thendistributed, by diagnosis, by using utilization and cost estimatesfrom various sources. This method of calculating direct costs ismost common in studies whose primary purpose is to estimate ag-gregate costs of illness by broad diagnostic category. Excellent ex-
Such an approach involves three steps:
1.
2.
3.
Ascertain utilization of specific servicesand supplies.Determine unit costs for each resourceidentified in the first step.Multiply quantities of resources utilizedby their unit costs to determine resourceexpenditures; then aggregate similar ex-penditure components to obtain categori-cal totals.
The utilization of specific services (e.g., num-ber of days of hospitalization) often varies withpatient age and perhaps sex, so utilization es-timates should be developed with specific regardto patient age group and sex. Direct costs pro-jected to occur at future time periods should beappropriately discounted (discussed later), andall such future follow-on costs should be ad-justed for patients’ survival probabilities. Theidentification of resources utilized (both typeand quantity) can be largely accomplished byreviewing the literature identified in the biblio-graphic references at the end of this case study.(Professional judgment can be employed for fur-ther clarification or to fill any gaps. )
Unit cost data could be compiled so as to re-flect geographically representative prices. Perti-nent regional data exist in the American Hos-pital Association’s Guide Issue and HospitalStatistics (hospital costs); Medical Economics(physician fees); California Relative Value Scale(physician fees); Medicare Survey published inNew England Journal of Medicine, May 13,1976 (physician fees); HCFA’s Invoice-LevelPrice Survey (drug costs); IMS American, Ltd.,National Prescription Audit (drugs); the Na-
positions of this method and examples of its use are found in Rice(54) and Cooper and Rice (17).
As one might imagine, the major difficulties with this approacharise from the quality of available data used to distribute totalexpenditures related to a given diagnosis. For example, it would benecessary to distribute diagnostic-related expenditures (for arthri-tis) in accordance with the frequency of surgical v. medical treat-ment. The availability of data necessary to implement this ap-proach is not readily apparent. Furthermore, although associatedconditions or multiple diagnoses do affect length of stay, diag-nostic distribution of days of hospital care is based on primarydiagnosis. Also, several different data sources are often used in dis-tributing hospital care expenditures by diagnosis depending on theparticular type of hospital in which patients receive care (e. g., Fed-eral, long-term, non-Federal )
12 ● Background Paper #2 Case Studies of Medical Technologies
tional Ambulatory Care Survey of NCHS (out-patient followup and chronic care costs).
In the event that long-term nursing home careor home care is identified as a relevant resourcefor a particular population cohort, pertinentcost information can be obtained from availableFederal documents (e.g., 11). Finally, the cost ofthe prosthesis can be obtained from industrydata. (The procurement of hospital chargesassociated with various orthopedic joint im-plant procedures from the Social Security Ad-ministration’s 20-percent sample of medicare re-cipients, CHAMPUS, NCHS, or PAS dischargeabstract data is worthy of future investigation. )
In order to demonstrate the aggregative cost-ing methodology just described, we generate avery crude estimate of the initial direct cost of ahip, knee, ankle, shoulder, or elbow joint im-plant below. This estimate is based on resourceneeds identified in the literature and typicalvalues.
Surgeon’s fee . . . . . . . . . . . . . . . . . . $1,000Operating room fees . . . . . . . . . . . . 500Anesthesiologist’s fee . . . . . . . . . . . . 200Prosthesis . . . . . . . . . . . . . . . . . . . . 50020-day stay at $200 per day . . . . . . . 4,0004Miscellaneous . . . . . . . . . . . . . . . . . 400
Total initial direct cost . . . . . . . . . $6,600A toe or finger joint implant requires a shorterhospital stay, so the total initial direct costwould be slightly lower,
Other pertinent direct cost components in-clude the cost of followup and, occasionally, re-habilitation therapy. The resource needs associ-ated with these cost components would prob-ably have to be estimated by medical expertsand costed out by using existing hospital andprovider data. Hospital and provider data mustbe derived from a variety of sources. The use ofthese data implies the necessity of having to dealwith the inconsistencies imposed by differencesbetween costs and charges as well as by varia-tions in reporting techniques. Consequently, awell-defined, consistent set of assumptions isnecessary in order to “merely aggregate costs. ”
41t should be noted that the ~ nit cost estimate reflects charges,which do not represent true cost estimates.
Direct costs must include the expected valueof a complication and thereby account for thenecessity of patients’ having further medicaltreatment. This value can be calculated on thebasis of data that present the frequency ofvarious complications (by population cohort)and the direct cost of such complications.
Indirect Costs
Indirect costs associated with orthopedic jointimplants include productivity losses that resultfrom patients’ spending time in the hospital andrecuperating at home and from the patients’family and friends spending time visiting in thehospital, etc. Typically, such time is valued bylost earnings and lost household productiondata. These data are readily available in a studyby Mushkin, et al. (45). Earnings foregone dueto premature death also comprise indirect costs.These data, too, are available in the Mushkinstudy.
Complications
Both direct and indirect costs must includecosts of any lack of safety and resulting presenceof complications associated with orthopedicjoint implants. Expected values of the direct andindirect costs associated with complicationsmust be included in the estimate of total cost.
The literature suggests that much is knownabout safety of joint implants. The materials—metal, plastic, and cement—now have a longperiod of use behind them and only mild evi-dence of toxicity, quite commensurate with thebenefits. Cemented bones sometimes resorb(dissolve) for reasons that are not well under-stood. Delayed infections are thought by someto be the consequence of sepsis (infection) origi-nating elsewhere in the body, but most believe itis the consequence of bacteria introduced at thetime of operation. Followups must be long-term—2 or 3 years is not long enough—andlater occurring infections have been known toarise after 8 years. However, most failures, ex-cept infections and ultimate loosening of the im-plant, become evident in the early months.
Complications with hip replacement are welldocumented, and means for avoiding them are
well established. Nevertheless, even the “bestcenters” have not succeeded in eliminating thesecomplications entirely. In addition to facing therisks associated with any major operation, pa-tients with hip replacements have a higher in-cidence of thromboembolitic problems, al-though mortality from this cause is only about 1percent. Deep wound infection occurs in 1 to 2percent of patients (and may occur very late—cases up to 8 years after the operation have beenreported). Loosening of the femoral componentis relatively common—estimates run as high as20 percent of all patients—though in many casesthe patient remains asymptomatic. Occasional-ly, the femoral component itself fails. Othercomplications of joint replacement includeloosening, dislocation, neurovascular deficits,periarticular calcification, nonunion of cutbone, malposition of components, fractures,and discrepancy in limb lengths. Reoperationsare often, but not always, possible.
It should be noted that R&D costs are not andshould not be included in the specification ofrelevant costs. R&D costs are already sunkcosts; they are not incurred as the giventechnology diffuses.
Determination of Benefits
The benefits that accrue to patients success-fully undergoing orthopedic joint implantationinclude intangible personal gains in terms of in-creased self-esteem and decreased pain and suf-fering, as well as economic savings realized byincreased income and reduced illness-related ex-penditures. It is convenient to categorize bene-fits in the same way as costs: direct and indirect.
Direct Benefits
Benefits pertaining to the relief of pain havebeen described by Harris (29). He compared thepreoperative and postoperative prevalence offive categories of pain, ranging from severe tonone, among 124 patients with hip implants.Fifty of the 124 reported severe pain pre-operatively; only 1 of them (with pain sec-ondary to a sciatic palsy) complained of severepain after the operation. Preoperatively, only 1patient reported no pain; 106 patients claimedno pain postoperatively.
Examining functional status, Harris (29) com-pared the preoperative and postoperative over-all evaluation ratings of the 124 hips with fol-lowup periods of 6 months or longer. The aver-age preoperative score was 44.3 and the averagepostoperative score was 92.3, substantialchange. In fact, all but a single patient reporteda significant improvement. In terms of supportrequired, the number of individuals requiringno support increased from 23 preoperatively to114 postoperatively. In terms of distancewalked, preoperatively, 15 individuals claimedthe ability to walk an unlimited number ofblocks; postoperatively, 114 individuals assert-ed the same ability. Finally, in terms of having alimp, 50 patients classified their limp as severepreoperatively, and only 1 patient complainedof this problem postoperatively.
In order to ascertain monetary benefits, it isnecessary to take account of the heterogeneityof the population undergoing surgery. On thebasis of several sources (Charnley in 1972 andRing in 1974, as described by Taylor (65)), wecan separate the population into three groups:1) persons under 60 years (30 percent); 2) per-sons aged 60 to 70 (42.5 percent); and 3) andpersons aged 70 or older (27.5 percent). T h emost significant economic benefits based on ear-nings accrue to those individuals in the pre-retirement group (i. e., the first group and half ofthe second group), although there is an under-estimation of the savings accruing to females. Ifwe use income data that value household pro-duction and take account of labor force partici-pation rates, productivity increases, and mor-tality trends (45), we can obtain a fairly goodestimate of the benefits accrued as a re-sult of alleviating disabled and handicappedpersons.
Benefits paid to those incapacitated withrheumatism and arthritis are transfer paymentsand therefore should not be measured as part ofthe real (resource) cost to the economy. How-ever, they do merit consideration as an indica-tion of the amount of economic assistance soci-ety is offering potential recipients of orthopedicjoint implants. These benefits include appropri-ate payments under the following programs:Old Age, Survivors, and Disability Insurance;
14 . Background Paper #2: Case Studies of Medical Technologies
Aid to the Permanently and Totally Disabled;Veterans Administration Annual Compensationand/or Pension.
Indirect Benefits5
Indirect benefits associated with joint im-plants primarily consist of the savings thatresult from averted expenditures on caring forthe individuals who without an implant wouldhave been handicapped by their arthritis. Theyalso include additional savings that result fromaverted drug and equipment expenditures asso-ciated with arthritis. Data concerning these canbe derived from information contained in astudy of the economics of arthritis by Nuki,Brooks, and Buchanan (47). More recent infor-mation can be found in unpublished and pub-lished data from the Health Interview Survey ofNCHS.
Success and Efficacy
Both direct and indirect benefits must take ac-count of both the expected success of the im-plant procedure and the efficacy of the ortho-pedic joint implant.
It has been observed, though not reliably doc-umented, that success rates are higher with sur-gical teams who do joint implantations fre-quently, and who presumably, therefore, havemore skill and experience (4). Because deep in-fections are a more frequent and severe com-plication in joint implantation operations thanin others, adherence to rigorous standards ofasepsis is very important. Adherence to suchstandards requires properly equipped facilitiesand properly trained staff, and these re-quirements are sometimes used as arguments tosupport confining joint implantation operationsto selected centers.
Hip implants are said to be efficacious—thatis, to yield good to excellent results in relievingpain and restoring nearly normal function—in85 to 90 percent of the cases undertaken (26,27). Knee implants have almost as good a
51n the cost-effectiveness framework described above, these in-direct benefits offset (and are therefore subtracted from) the cost ofthe orthopedic joint implant procedure.
record—relief of pain in 90 percent of the cases,deep infections in O to 7 percent, and an overallfailure rate of 7 to 22 percent after 2 years (18).
The aforementioned figures are drawn fromreview articles, which in turn are the product oflong series of results. Charnley is still active inthe field, and his early patients provide thelongest term data. Many of the clinical trials oforthopedic joint implants are simply voluntarysubmissions by surgeons of a long series of theirpatients. As a result, it is often difficult to iden-tify the sources of differences in outcome amongdifferent groups.
Focus on Average RatherThan Marginal Effectiveness
The focus of CEA/CBA of orthopedic jointimplants is on average effectiveness, a measurewhich assumes that benefits and/or effective-ness are equally distributed among all personsincluded in the computation of a single ratio,Marginal effectiveness, a concept which refersto the benefit and/or effectiveness derived fromthe last orthopedic joint implant recipient, islikely to be less than average effectiveness,because the people who are likely to derive thegreatest benefit from orthopedic joint implantsare likely to receive prostheses earlier thanothers for whom the potential benefit is not asgreat.
In order to remove this constraint from theanalysis, it would be worthwhile to performCEA/CBA separately for different populationcohorts.
Regression to the Mean
Another limitation inherent in CEA/CBA oforthopedic joint implants is the complication ofthe interpretation of the results due to the re-gression-towards-the-mean phenomenon. Thisphenomenon is the tendency exhibited by painor functional status indicators that are selectedfor a group of patients on the basis of extremevalues that may reflect a fluctuating compo-nent. Thus, the actual fluctuation of pain andfunctional status may obscure the differencebetween preoperative true v. observed values.For example, if there are substantial ranges
associated with the definition of two healthstatus disability or functional impairmentcategories, incorrect inferences would resultfrom a comparison of the higher boundary ofthe low range with the lower boundary of thehigher range. This situation is likely to occurwhen arthritis victims experience both pain-free, unimpaired days and painful, disableddays. Obviously, a before-and-after compari-son yields results that are very dependent on thevalue assigned to the before period.
Shepard and Finison (58) review methods ofremoving the effect of regression towards themean. Many of these have practical—often ethi-cal—difficulties. From a theoretical point ofview, the best procedure is to identify a ran-domly assigned control group of patients whowould not be offered orthopedic joint implants.A more ethically acceptable, albeit more costly,
method is to obtain a series of measurementsand average them. Shepard and Finison suggestan alternative approach that builds on sys-tematically collected data from large samples oflongitudinal research studies. Their work sug-gests that it is possible to derive estimates of sta-tistical regression and thereby obtain a mean-ingful baseline indicator to determine the effectsof orthopedic joint implants.
Placebo Effect
The interpretation of benefits might be fur-ther obscured by the placebo effect. In par-ticular, it is possible that the benefits of or-thopedic joint implants are overstated by thevalue of benefits equivalent to the value of thosewhich are associated with any “treatment” (e.g.,a bone scraping).
USEFULNESS OF CEA/CBA OF ORTHOPEDIC JOINT IMPLANTS
Present Policy Formulation
At the present time, orthopedic joint implanttechnology is regarded in much the same man-ner as other surgical procedures. Since it doesnot require a substantial investment ($150,000)in capital equipment, it is not affected by capitalcontrols, except to the extent that the building ofadditional operating room facilities are affected.In most cases, there are operating rooms fairlywell equipped to handle orthopedic joint im-plant procedures; hence, the marginal cost asso-ciated with this procedure is very low. The ma-terials and devices used in the procedures aresubject to FDA regulation.
Effect of Limitations and Constraintsof CEA/CBA on Its UsefulnessPublic Policy Formulation
Imperfect Substitutability of AlternaOrthopedic Joint Implants
in
ives to
The alternatives to joint implantation areanalgesics and other drugs, aids to ambulation,and physical therapy. Rheumatoid arthritis can
be treated with a variety of drugs, none of themvery satisfactory. Osteoarthritis in its earlystages can be relieved by analgesics, but thereare no effective medical treatments for its ad-vanced stages. Arthritis of all kinds tends tobecome progressively worse with time, so con-servative medical treatment is almost alwaysappropriate at first. Eventually, however, pa-tients with these afflictions become candidatesfor surgery. The stage at which surgery is ap-propriate depends on many factors—age, gener-al health, lifestyle, degree of impariment, re-sponse to analgesics, etc. Surgeons emphasizethe matter of staging (particularly with rheuma-toid arthritis, which is a systemic disease)—notoperating on a hip, for instance, until problemswith the knee and ankle have been broughtunder control.
Thus, although there are short-run alternativetreatments, in the long-run, only orthopedicjoint implants restore functional and pain-freestatus. Consequently, unless the analytical timehorizon (i.e., short-run v. long-run) is specified,the policy implications of CEA/CBA results arenot clear and may even be misleading.
16 ● Background Paper #2: Case Studies of Medical Technologies
Arbitrary Selection of a Policy Decision Rule
Another limitation on the usefulness ofCEA/CBA in public policy development, apply-ing in the case of orthopedic joint implants aswell as other applications of such analysis, isthat imposed by the arbitrary selection of apolicy decision rule.
Feasibility of Expanding andIntegrating the Use of CEN/CBA inPublic Policy Formulation
Typically, the overwhelming problem pre-cluding CEA/CBA is the lack of adequate data.Although an optimal set of data to allow quickand precise estimation of the costs and benefitsof all orthopedic joint implants does not exist,further study in the area of CEA/CBA of ortho-pedic joint implant technology is feasible,because the necessary cost, incidence, prev-alence, and outcome data can be assembledfrom existing data and the literature. Further-more, such study would be useful, because orthopedic joint implants have the potential ofbecoming a widespread technology and couldaffect more than 900,000 arthritis patients whoare unable to engage in work, housekeeping, orschool activities.
Close study of the hip implant appears to beparticularly worthwhile, because research onthis would provide insight into future fundingdecisions for other orthopedic joint prostheses.Because the prostheses are at different stages ofdevelopment and address problems of differentdegrees of severity, the prostheses for each jointmust be discussed separately. Although hip
joint replacements, in the great majority ofcases, are an accepted therapy to relieve painand restore the important function of mobility,the same cannot be said of replacements of otherjoint Whether or not to undertake replacementis much more of an issue in the case of otherjoints, and selection of patients remains a policyissue about which the results from a currentCEA/CBA of hip joint implants could providevaluable insights.
A prerequisite to the incorporation of CEA/CBA of orthopedic joint implants in the processof public policy development is the use of addi-tional material to supplement such analysis. Thechoice of which technologies’ development and/or diffusion should be encouraged depends onsociety’s welfare function, a weighted combina-tion of values of the constituency, AlthoughCEA/CBA does provide a convenient means oforganizing and considering information aboutorthopedic joint implants, results from suchanalysis must be considered in conjunction withrelevant political realities and legal and ethicalissues.
Another prerequisite to the incorporation ofCEA/CBA of orthopedic joint implants in pub-lic policy formulation is the use of currentanalyses. Policies developed on the basis of out-dated data and discount rates are not very use-ful and can be misleading.
If these prerequisites are met, then CEA/CBAof orthopedic joint implants could be a usefulinput into policy decisions regarding reimburse-ment practices, R&D funding, safety and ef-ficacy regulation, capital controls, and medicalmanpower distribution.
USEFUL DIRECTIONS FOR FUTURE POLICY RESEARCH
costs and benefitsIn this study, we have indicated that CEA/ by arraying and quantifyingCBA is a feasible means of providing an objec- for each.tive, systematic, and useful analysis of publicpolicy issues relating to the diffusion of or- Although CEA/CBA has intrinsic limitationsthopedic joint implant technology. Performed as an analytical technique (e.g., failure to pro-correctly, the technique provides a convenient vide a unique, nonarbitrary criterion for choice;method of comparing two or more alternatives failure to account for rapidly evolving techno-
logical advancements; possible dominance of anunknown factor, for instance, the discountrate), these limitations are not sufficient topreclude future CEA/CBA studies related tothe medical technology of orthopedic joint im-plants.
It has been pointed out that the costs of ortho-pedic joint implants can be more easily meas-ured than the benefits. As a result, it is easy tooveremphasize the costs associated with suchprocedures. Furthermore, there is a danger ofunderestimating benefits by inadvertently dis-counting the value of relieving pain and restor-ing functional ability to a predominantly non-working population. Therefore, it might be sug-gested that studies of othopedic joint implanttechnology should focus on the efficiency andcost effectiveness of alternative investmentsrelated to orthopedic joint implants.
A CEA study of the artificial hip would be aparticularly worthwhile future research en-deavor. Since the necessary data are available,it would be possible to complete the study rela-tively quickly, easily, and inexpensively. Be-cause arthritis affects so many persons and inmost cases eventually affects the hip joint, aCEA study of the artificial hip to answer ques-tions such as those listed below would be ofwidespread interest.
What are the costs of artificial hip im-plants?For which population cohorts is it mostcost effective to adopt this technology?
REFERENCES
1.
2.
3.
Arnstein, S. R., “Technology Assessment: Op-portunities and Obstacles, ” ZEEE Trans. Syst.Man & Cybern. 7(8):571, 1977.Arthur D. Little, Inc. , Cambridge, Mass., inter-nal studies for commercial clients, 1979.
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How do cost-effectiveness ratios computedfor investments in orthopedic joint im-plants compare with similar ratios com-puted for investments in regional arthritisand rheumatism nonsurgical rehabilitationcenters?What are the necessary data that must becollected in order to conduct similar studiesfor other orthopedic joints?What are meaningful criteria to adopt inorder to screen new and other existing or-thopedic joint implant technologies?
in conclusion, the value of undertaking a fu-ture CEA/CBA of artificial hip implants is thatthe application of such analysis would force oneto be explicit about a technology that potential-ly may affect many people. Also, it would fur-nish a tested framework for evaluation of othermore controversial medical technologies (e. g.,other prostheses and devices used to restorefunction to malfunctioning organs and otherparts of the body). Finally, the application ofCEA/CBA to the technology of hip implantswould illustrate a methodology realisticallyadapted to available data. Such informationwould be greatly useful to Federal policy makersand to consumers. It would also be useful tohealth systems agency boards, to health main-tenance organization administrators, and toother health planning agencies with the respon-sibility for allocating resources for research andcapital expenditures. The information mightalso be valuable to industrial concerns that mustestimate the orthopedic equipment market andto educational institutions that must knowwhere training emphasis should be placed.
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4. AuFranc, O. E., “A Critical View of Total JointReplacements, ” Clin. Orthop. 123:3, 1977.
5. Bain, L. S., et al., “A Double-Blind Trial ofFeprazone in Osteoarthritis of the Hip, ” Curr.Med. Rest Op. 4(9):665, 1977.
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