On Aug. 16, the Times-Union summarized an article that recently appeared in the New York Times.
The article used a series of anecdotes to mischaracterize the orthopaedic  industry and the cost of hip replacement surgery in the U.S.
The author profiles a U.S. patient whose insurance company refused to cover hip replacement surgery. A hospital quoted the patient a price of $78,000 for the surgery, excluding physician fees.  The patient ultimately went to Belgium for the surgery and paid $13,660, which is about the same as what Medicare pays today (U.S. private insurance paid about $40,000, on average, in 2012, according to the International Federation of Health Plans).
What  could explain the roughly $65,000 gap in price between the U.S. and Belgian hospitals? An  interesting question, but the author leaves it unanswered. In fact, nowhere does she indicate that she contacted the hospital at all.  
Instead, she focuses her article on the price of hip implants in the U.S., portraying them as a key driver of healthcare costs. If we are to believe the author's numbers, the implant used in her patient profile cost $3,800 more in the U.S. than in Belgium. But this difference, assuming it's correct, only explains 6 percent of the $65,000 gap. What about the remaining  94 percent?
In her haste to pin responsibility for the amount hospitals charge payors and patients on device manufacturers, the author overlooks the crucial fact that the prices hospitals pay for primary hip implants in the U.S. have declined 13 percent since 2006, while hospital reimbursement for hip replacement surgery has increased. Whatever may be driving healthcare costs, it's not the price of orthopaedic implants.
The author recklessly refers to the orthopaedic industry as a “cartel,” a completely unfounded charge, refuted by the fact that implant prices are declining as a result of fierce marketplace competition. In fact, the author makes this point herself, describing how one hospital drove down implant prices by more than 30 percent. So which is it: a “cartel,” or a highly competitive marketplace in which a hospital is able to reduce pricing by more than 30 percent?
Orthopaedic companies face tough competition from both domestic and foreign manufacturers, despite the author's claims to the contrary. For example, from 2012-2013, FDA cleared 63 new hip replacement products manufactured by 17 companies. Thirty of those products are manufactured by companies headquartered outside of the U.S.
The author also mis-characterizes the cost of implant manufacturing. Our publicly available financial statements reveal that Biomet spends 30 cents of each revenue dollar on producing the products we offer. After all costs and taxes, Biomet’s reported adjusted net income is 12 cents on the dollar. But economic success is not possible unless we are able to help surgeons and hospitals improve the lives of their patients. If we are not successful in that pursuit, our customers will simply choose another company's products and our profits will diminish. Sustained profitability is an indication that we’re doing our work well.
To that end, we constantly innovate, improving implant technology to address an increasingly young patient population with high expectations for active, productive lives. The author seems to be of two minds regarding innovation, dismissing new products as “tweaks,” yet also stating that “... as technology and techniques improved, its use broadened to include younger, less debilitated patients who wanted to maintain an active lifestyle, including vigorous sports or exercise.” Implant technology has advanced to meet these rising expectations, helping to transform lives in the process.
To accomplish this innovation, manufacturers must work with orthopaedic surgeons. The author suggests that such engagement somehow props up implant prices, but again fails to note that prices are declining.
Orthopaedic manufacturers require access to the expertise of, in the author’s words, “a tiny percentage” of orthopaedic surgeons, who are compensated at fair market value to assist in product development, training and education and clinical studies. Their involvement is absolutely necessary and completely legal. Does the author seriously think that implants should be developed without surgeon input?
Warsaw’s orthopaedic companies have thrived by helping improve the lives of millions of patients. One thing the author did get right is that “for most patients, implants have proved miraculous in improving quality of life.” It is also a great investment; new research shows that knee replacement surgery actually saves society nearly $19,000 per patient by reducing disability and increasing productivity. The healthcare professionals and implant manufacturers that help create the opportunities for these miracles are providing tremendous value to our healthcare system and to the patients it serves.