The Dilemma of a Repless Model
Repless Model is a great idea to reduce costs of a total joint replacement episode but introduces unique challenges.
With the bundle payment initiatives, joint replacement surgeons and hospitals have started to assess the cost for the episode of care in an effort to reduce costs. One relatively easy item to manage is the cost of implants, which are highly unregulated. For example, a total knee implant not only varies between companies ($3000 – $5000), it also varies in different hospitals for the same company based on volume of cases (Stryker knee, Figure 1, can vary between $3200 to $4500 in NY hospitals).
One solution is to use “generic” implants without a “rep”. A rep is the company representative that is responsible for ensuring proper instruments, opening the sterile packaged implants and going through the steps of the procedure with the surgeon or the scrub tech, Figure 2). In routine cases, a total knee surgery is a stepwise, defined procedure and in the vast majority of cases with a trained team, a rep is not required. However, this “repless” model imposes challenges to the surgeon: allocating responsibilities that the rep would do, taking additional risks such as ensuring the correct implant, appropriate instruments and backup help are available if something goes wrong during the case. Moreover, switching to a different implant company that is willing to participate in the repless model is not an easy task.
The cost saving is enormous. A generic knee implant with a good track record can be less than $2000 in my hospital, which is roughly a $1.2 MM saving annually. The problem in my situation (hospital employee) is that this cost saving is for the hospital, there is no “gain sharing” and no negotiations.
- Is this transition worth the risk, especially since the cost saving is for the global healthcare and the hospital, not for the patient?
- Is using “generic” implants, which bears additional responsibilities, difficulties and risks, worth the savings for the hospital?
- What is the best way to manage a repless model?
In a bundled payment model, all should be able to share in the savings.
There are some very good “generic” implants out there now that are comparable to the major vendors. Revision implants are where there is still a large difference.
The hospital can use the money that it saves to hire one of the now unemployed reps, to be the hospital’s implant coordinator, managing inventory, communicating with the surgeons to make sure all the desired equipment/implants are available, and even helping staff in the OR when needed.
We do use the repless model at our Organization. First, I should tell you that I am very impressed with the leader of our Supply Chain. He is amazing and has really transformed our Organization. From our experience:
1. Yes, with the correct marketing we can take our program savings ($4M-6M) and higher quality outcomes both to Large Companies and to individuals. Statistically we have reduced LOS from 3 days to 1 day for 60%+ of Ortho cases, we are showing employees returning to work almost twice as fast. You get a lower cost for your total knee or hip, and return to significantly faster with equal quality. Add to this the fact that CMS is now allowing us to gain share with our doctors which will allow the program to continue to grow and add even more opportunities.
2. You don’t just have to use generics even though the quality we have seen over 20 years has been equal to any other manufacture. We believe all vendors will eventually participate. We have two of the largest vendors close to finalizing contracts.
3. Our model retrains scrub techs to totally replace reps for 60% + of cases. Doctors are happier and cases are running more efficient and faster. We have reduced the seven or eight trays of instruments down to two for reduced processing time and cost of instruments. This is saving the Vendors million of dollars in lost, broken, and/or stolen instruments. Vendors are writing off 5-20 % of their implant and instruments each year. We have eliminated that for them. Additionally, our Ortho CarePathway has helped reduce around 75% of all the post 90 day episode cost. Lastly, our new software supports the whole process and captures all data points for research and continuous learning. We are ready to roll it out to other organizations to help us to continue to drive cost down even further.
Great question Mort!
Taylor Grace, Our Health System as attempted various forms of repless models with no success. We encountered significant challenges in breaking long-term relationships between vendor reps and surgeons. These relationships have prevented our supply chain team from achieving implant price savings through aggressive negotiations with the vendors. The surgeons often refuse to walk-away if the vendor does not participate or lower their prices. Due to aggressive market competition between the health systems within our region, the surgeons simply threaten to take their procedures to our competitor. Even our cost sharing programs have not succeeded. Have you encountered these challenges as well? If so, how did you overcome the ‘relationship factor’?
The implant switch may not be as much a challenge as replacing the rep’s function of supervision of instrument processing and delivery as well as inventory control. We had a similar move with simpler implants such as intramedullary nails and were universally unsatisfied with the results. The costs to the hospital to provide a similar level of organization and service with a hospital employee rather than vendor employee were more than the hospital wanted to allocate and we went back to the old system. Their is absolutely an opportunity here, but the hospital has to commit to retaining the implant coordinator and paying them on the same level as the rep.