Hospital for Special Surgery takes a bit of a hybrid approach. Leaders negotiate with vendors, often setting an appropriate price the hospital is willing to pay for a product—$11,000 for a hip, for instance. But instead of negotiating contracts that limit physicians' options, the hospital lets physicians choose any vendor willing to meet the bar.
"We get buy-in from the surgeons involved so we can, across the board, say you can use any device you want as long as the vendor you're working with meets this particular price," says Padgett.
For new developments—prototypes and technologies in the evaluation stage—the hospital takes a different approach. Before introduction, technologies are vetted at a subcommittee level and at a larger staff meeting to distinguish whether the vendor is repackaging an existing technology or genuinely offering something worth testing out.
"First question you ask," Padgett says, "is, Does it need to be diamond studded and gold plated? Is it worthwhile? Do we want it here?" Newer technologies that are approved are evaluated for about three years, at an initial vendor price. After that, they are reevaluated and the hospital gets a little more aggressive about prices.
While medical tourism has yet to revolutionize the U.S. healthcare industry, its impact on joint replacement service lines has been higher than it has on less-commoditized areas of healthcare.
India's burgeoning joint replacement marketplace, in particular, has the potential to affect hospitals halfway around the globe. Given the overwhelming demand for joint replacement in the United States, losing business to overseas hospitals may not be a pressing concern for most U.S. hospitals. But like India's economy, the trend is poised to grow.
Medical tourism, however, works both ways, and U.S. hospitals that have staked out a best-in-the-world reputation can lure international patients who are looking for a top-quality surgery with a quick recovery time.
Hospital for Special Surgery gets a handful of international patients each year. And while the volume isn't high enough to warrant anything like an overseas advertising campaign—most of the patients hear about the facility through word-of-mouth or the Web—the hospital has spent time developing a strategy specifically aimed at international patients.
"We have an international center here. We're not doing a lot of advertising in Qatar, but if someone wants to have their hip done, we have in place a whole pathway for them, including the financial aspect of it. We give them a reasonable price, which includes everything," says Douglas Padgett, MD, chief of adult reconstruction and joint replacement services at HSS.
Most joint replacement programs will continue to get the majority of their business from a local or regional population. But as healthcare continues to slowly go global, joint replacement may be one of the services leading the way.