“I’ve been an AK for 23 years and can only wish that my prosthetic allowed me to be as active as I was prior to losing my limb. It is nowhere near as good as the real deal, and I have [a] $100,000 leg. No kidding. That’s what was billed to my insurance company.”
Cheryl, less is more reader, commenting on “the disconnect“
“[A]mputees [ ]would be a lot better served with better products for far lower prices. … [The prosthetic hands I happily use] cost $400 to $700 bucks[.] That concept has certainly not been understood by manufacturers and as long as that is not the case I see no reason why insurances are [not] guilty of [ ] paying for shamelessly overpriced gadgets[.]“
Wolf, less is more reader, commenting on “the disconnect“
While the term “prosthetic costs” means different things to the different players in the U.S. health care system, few would describe these devices as “cheap.” Insurance companies pay thousands of dollars even for low-end prostheses, while technologically advanced ones cost tens of thousands, with some breaking the $100,000 barrier.
Why do prosthetics cost so much? It’s a fair question.
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the component-part manufacturer
Companies like the one I work for invent (or buy from others), fabricate, and sell a wide range of components, ranging from prosthetic hips, knees and feet for people with lower extremity limb loss to prosthetic fingers, hands and arms for upper extremity amputees. They also make liners, adaptors and pyramids that prosthetists use to assemble the finished prosthesis.
If you ask a component-part manufacturer about the cost of its devices, you’ll get a detailed lesson in the product development and manufacturing process. What starts as a concept “drawn” into a computer eventually makes its way to the marketplace, typically over the course of 18-24 months, and in the case of more complex technologies – think myoelectric, microprocessor, and motor-powered devices – two to three times longer than that.
The manufacturer then has to take into account the costs of manufacturing and assembling these products once they’re market-ready. You have the expense of the raw materials used in the device; the costs of purchasing certain sub-elements – particularly in the case of more sophisticated technology – from other manufacturers; and the expense of operating the factory where a team of people and costly machines make the item.
Next, you have the development of marketing and educational materials, as well as the fixed costs of a sales force that provides both information and support to providers actually fitting the device. Finally, you have the costs associated with maintaining and supporting the product post-launch. This provides a high-level snapshot overview of the expenses associated with a product, and it doesn’t even take into account a myriad of other expenses I’ve left out for the sake of simplicity (e.g., legal/regulatory expenses, etc.)
While you may say this model supports bloat and expense, no viable alternative to it has come to the fore. The Open Prosthetics Project – an open source approach to prosthetic solutions – has close to 600 members, but hasn’t disrupted the traditional approach yet.
Prosthetists buy most of their prosthetic parts from component-parts manufacturers. In addition, they have to purchase plastics and other materials to custom-fabricate the prosthetic socket that’s fit to the patient’s residual limb.
In addition, prosthetists do not get paid on a “per visit” basis. Payors only reimburse them for delivering a device, an amount that implicitly includes both the time the prosthetist spent fabricating and assembling the prosthesis, and the time associated with all necessary follow-up treatment and training.
So when you talk about prosthetic costs with a prosthetist, he’ll typically take into account the following: (1) all of the costs associated with buying components, plus (2) all of the costs of the raw materials that he crafts into a socket, plus (3) the cost of his time to make the prosthesis, plus (4) the estimated future cost of seeing you multiple times after delivery to both adjust the prosthesis and, if necessary, train you to use it effectively.
All payors, whether governmental or private, think of prosthetic costs as the amounts billed to them by prosthetists. And payors – especially private insurance companies – have increasingly shifted health care costs towards consumers over the last 8-10 years.
While the stated goal of cost shifting is to encourage patients to make economically-intelligent health care decisions, most data suggest that the primary effect is to discourage patients from seeking any health care at all, which may lead to higher health costs when they finally do seek treatment. Secondarily, cost shifting results in lower expenditures and higher profitability for payors, while purportedly helping employers keep insurance premiums from spiraling out of control.
That leaves us with the people who need prosthetic care and who increasingly shoulder a higher share of the prosthetic cost burden. We want the prosthesis that’s most comfortable and that gives us the greatest possible mobility. Over the last decade, our wants have often led us to more complex (read: expensive) prosthetic solutions. We wear a prosthesis that brings us closer to a four-limbed individual’s functional level, but it comes at a higher cost, both in terms of raw dollars and the amounts that we’re asked to spend in the form of copays and deductibles.
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“[Y]ou act as if prosthetic prices were ‘as is.’”
Wolf, less is more reader, commenting on “the disconnect“
The question of whether the economics of this system make sense or treat people with limb loss fairly doesn’t have an easy answer. Like it or not, in the U.S. right now prosthetic prices are ‘as is.’ While alternatives may theoretically exist, implementing them might come with other costs, such as discouraging innovation or encouraging the use of less expensive and less functional materials.
I’m employed by a component-parts manufacturer today. I worked for and co-owned a prosthetic facility before that. I’ve been an amputee since 1996. And I represented payors in the early part of my professional life.
The only thing I know for sure is that there are no easy answers to the cost conundrum.