Smart Pricing of Lumbar Stand-Alone Devices
Today’s vendor technology is no longer siloed into a specific classification. For example, an ALIF (anterior lumbar interbody fusion) device used to be just an ALIF.?Today, that same ALIF can be used as a spacer, lumbar stand-alone assembly, or an ALIF with buttress assembly.
Assigning pricing to the assembled device is a challenge as vendor’s will typically request a much higher price than average for ALIFs that can be used as assemblies.
Where do you start?
Review your current pricing.
Research your technology:?Current vendor websites may not delineate the spacer as having multiple uses.
The first place to start is to price all of your ALIFs at the same price – no matter if they are used as just an ALIF, a stand-alone lumbar integrated device, or an ALIF with a buttress assembly.?The average cost for an ALIF is $3,500 or less.
Example 1 illustrates how the vendor priced an ALIF as a lumbar stand-alone assembly price of $5,500.?The ALIF in Example 1 can be used as an ALIF or as a component in a Stand-Alone Integrated Device.?A typical stand-alone lumbar assembled device consists of an ALIF, plate/cover plate, and screws with an average assembled cost of $5,200 or less. As different integrated devices have different components depending on the vendor and technology, standardizing the price of the ALIF, and adjusting the remaining components to total $5,200 is the easiest way to price any assembled device.
To throw in several curveballs, the way in which an ALIF is used in an assembly can change the assembly’s categorization / classification:
Stand Alone Lumbar Assembly:
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ALIF with Buttress Assembly – Requires supplemental fixation (pedicle screws, rods):
The takeaway from this exercise is twofold:?1) establish the ALIF price first so everything else that could be included can be priced to total up to your average price for that particular category / classification, and 2) classification of the individual implants is key to managing your implant pricing.
For more information, please contact Kim Nilsson at [email protected] or 980-721-2637, or John Ossowski at [email protected] or 801-209-3304 or Andrew Arreola at [email protected] or 480-510-7940.
Meet the Authors
Kim Nilsson brings 25+ years of experience to Pinnacle, including a diverse healthcare background as both an RN and MBA, having served in a variety of clinical, operational and consulting/leadership roles throughout her career. She has spent the last 15 years assisting hospitals and IDNs in contracting for spinal fusion, total joint, and biologic implants and supporting OIG compliant gainsharing projects focusing on physician engagement in each process.
John Ossowski has over 20 years of analytics and consulting experience in healthcare, with the last 10+ years engaged in managing the orthopedic, spine, and biologic contracts for a large integrated delivery network (IDN).?In addition to direct contract management, John currently provides service line specific clinical value analysis support focused on spine, total joint, and biologic implants, as well as championing gainsharing projects.
Andrew Arreola is a Consultant with the Strategy and Operations team and has more than 12 years of healthcare experience, including 10 years in Materials Management. Given his extensive background in Supply Chain, his expertise includes supporting OIG compliant gainsharing projects, sourcing, contract negotiations, purchasing, planning, inventory management, and cost accounting.
About Pinnacle
Pinnacle Healthcare Consulting (PHC) is a national consulting firm headquartered in Denver, Colorado with offices in St. Louis and Indianapolis. PHC provides a broad range of strategic, financial, and operational services to the healthcare industry and healthcare organizations such as hospitals, health systems, ASCs, and medical practices. Pinnacle leverages the resources of our six consulting divisions to provide superior services including provider arrangements & compensation valuation; transaction support services & valuation; strategy, operations & cost reduction; coding, compliance & revenue cycle services; enterprise risk & healthcare operations management support; and, real estate consulting. The consulting divisions and affiliated companies apply years of experience and a multitude of industry resources to improve business performance.