How much does a shoulder replacement cost?

Patients often ask, “How much will my surgery cost?” You would think that should be an easy question to answer. Unfortunately, it is not and that is one of the biggest problems with our current healthcare system.

Let’s take a shoulder replacement surgery as an example. When a patient has surgery their insurance company will pay bills to the surgeon, anesthesiologist, and hospital. Each of these are a separate charge. The amount that is paid may actually vary by the insurance company depending on what deal they have negotiated. Anthem might pay less than United who pays more than Aetna, etc.

As a general ballpark estimate, a shoulder replacement surgery will result in the hospital getting paid $20k, and the surgeon about $1,500. The patient may then pay a portion of that charge depending on their particular insurance plan and their deductible and co-pay. If a patient has a 10% co-pay and max deductible of 5k per year, then their surgery would cost them approximately 2,500. If their deductible max for the year is $1k, than they might pay $1k.

There are some interesting points that are often misunderstood such as the difference between charges and payments. A hospital can “charge” anything they want for a service, but they only get paid what has been negotiated with the insurance company. For instance, they can charge $100,000 for a shoulder replacement but when the hospital sits down to negotiate with the insurance company they will agree on a payment of around 20k. Often times I read articles in newspapers and magazines about the high cost of healthcare in the U.S and they like to cite things like a Tylenol costing $50. Unfortunately, that is not really accurate reporting. A hospital may “charge” fifty dollars for the Tylenol but that is not what they are being paid, and in many instances they aren’t paid anything for the Tylenol because it’s included in the overall fee. For instance, if you have a shoulder replacement in Virginia Beach the hospital doesn’t get paid for each Tylenol, antibiotic and chicken dinner. In most instances, they get paid a flat fee regardless.

A second point is that the majority of health care spending goes to the hospitals not the physician. Shoulder replacement surgery is a very good example of that.  The surgeon is paid roughly $1,500 while the hospital gets about $20,000. In the future, efforts to reduce the cost of orthopedic surgery procedures will focus on moving surgeries out of the hospitals and into surgery centers. The cost of a shoulder replacement in a surgery center can reduce the charges by nearly half. In the past this wasn’t a big deal to patients because their insurance company paid most of the bill, but now with high deductibles and co-pay plans these charges are being passed to patients. As a result there is now consumer demand for cheaper options and the marketplace is responding.

So when you ask your doctor, “How much will my surgery cost?”, don’t be surprised by the blank stare. The question is hard to answer without asking many other questions such as: what’s your insurance, what’s your deductible and co-pay, are you having the surgery done in the hospital or surgery center, ……..and the list goes on.

Hopefully in the future we will be better able to answer these simple questions.

Author
Brad Carofino, MD Dr. Brad Carofino is a board-certified (American Board of Orthopaedic Surgery), fellowship-trained orthopaedic surgeon who specializes in shoulder & upper extremity surgery. Dr. Carofino is an expert in shoulder replacement surgery, minimally invasive arthroscopic rotator cuff repair, and complex reconstructive procedures of the upper extremity.

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