NoCo knee, hip surgery fees second-highest in the United States

FORT COLLINS -— Average costs of knee and hip replacements in Northern Colorado rank among the highest in the nation, only slightly less than New York, because of a lack of competition in the region, according to a major insurer.

The reason for exorbitant costs of knee and hip replacement surgeries does not appear to be high rents, as may be the case in the Big Apple. The situation has more to do with the fact that Northern Colorado has two main health-care providers. In other parts of the Front Range, multiple providers offer services.

Average knee-replacement costs in Fort Collins and Loveland came in $24,500 higher than the average cost for all 64 markets in the study, according to a report released in January by Anthem Blue Cross/Blue Shield. The average costs of knee and hip replacements in Fort Collins and Loveland are $22,000 more than in the Boulder area, where such surgeries average $33,500.

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“Northern Colorado has historically had sole hospital communities – and if insurers didn’t contract with the one hospital in each community at the rate that hospital wanted, that hospital wouldn’t be in the insurer’s network,” said Joyzelle Davis, spokeswoman for Blue Cross/Blue Shield. “There wasn’t another facility option, so if an insurer wanted to do business in that geographic market, it took what it could get.”

The report analyzed three years of Blue Cross/Blue Shield claims data for typical knee- and hip-replacements, surgeries that the report highlights because they are among the fastest-growing medical treatments in the nation.

The information on costs comes as health care providers and insurers contend with the intricacies of the Patient Protection and Affordable Care Act, which has sought to lower health-care costs. Insurers typically do not release those figures publicly, and hospitals tend not to want to talk about them. Hospitals contacted for this report issued email statements instead of making medical staff available for interviews. Hospital officials also did not answer questions related to their own costs.

Knee- and hip-replacement surgeries average more than $55,000 in Fort Collins and Loveland, according to Anthem. That’s only slightly lower than in New York City, where the average cost of a knee-replacement surgery totals $61,200, and the average cost of a hip-replacement surgery totals $59,500.

University of Colorado Health dominates health care in Larimer County, although Banner Health also has facilities in the region.

“University of Colorado Health’s hospitals, including Poudre Valley Hospital and Medical Center of the Rockies, are focused on providing high-value health care,” UCHealth spokeswoman Kelly Tracer said in an email statement. “This means providing the best possible quality and outcomes at competitive prices. …

“High-quality care leads to lower long-term costs through fewer patient complications and readmissions,” she added.

Tracer also pointed out that UCHealth hospitals come close to average costs throughout Northern Colorado. In fact, for a knee-replacement surgery, costs in the Fort Collins and Loveland area vary by less than 1 percent, according to the Blue Cross/Blue Shield report. Costs can vary dramatically in some markets, such as in Dallas, where the cost of a knee-replacement surgery can vary by almost 270 percent.

Greeley also has expensive knee- and hip-replacement costs, although Blue Cross/Blue Shield did not mention it in its report. But according to the insurer’s own online cost-estimating tool, Greeley comes in even higher than the Fort Collins and Loveland area at $62,100 for a hip replacement and $58,100 for a knee surgery.

Banner Health, meanwhile, has a major presence in Northern Colorado with McKee Medical Center in Loveland and North Colorado Medical Center in Greeley.

Hospital charges are determined by medical device and equipment costs, contracts with health insurance companies and operational costs for a nonprofit organization that must operate 24 hours a day, seven days a week, Banner Health spokesman Paul Matthews said in a statement.

“It is important to note that a review of the cost for a single procedure does not consider overall hospital operations, including those provided at a loss, or the charity care that our hospitals provide,” he said. “It also does not take into account the quality of care provided.”

In Boulder, patients can get knee- and hip-replacement surgeries for an average of $33,600 and $33,400, respectively, according to Anthem’s online cost-estimate tool. Denver hospitals average $31,500 for a knee replacement and $30,400 for a hip replacement. Boulder’s proximately to the lower-cost metro Denver market, which has a variety of health-care options, may contribute to its lower costs compared with Northern Colorado.

Still, Boulder Community Health questioned Blue Cross/Blue Shield’s report. The insurer did not include that hospital in the report.

“Many organizations that do cost studies related to health-care procedures manipulate the data using a proprietary formula that is kept confidential,” said Rich Sheehan, spokesman for Boulder Community Health.

Blue Cross/Blue Shield believes Northern Colorado’s higher costs will face pressure from looming competition, such as when Banner Health builds its new hospital in Fort Collins. The insurer also has created a narrow network with UCHealth facilities to get more competitive rates.

“The Northern Colorado market is starting to change now,” said Davis, the spokeswoman for Blue Cross/Blue Shield. “These market dynamics will continue to lower the prices in the market. 

The insurer also believes that showing patients how costs vary can influence hospitals to watch costs more closely.

“The pressure of Northern Colorado being labeled one of the higher-cost markets in the nation is having an impact,” Davis said.

Steve Lynn can be reached at 970-232-3147, 303-630-1968 or slynn@bizwestmedia.com. Follow him on Twitter at @SteveLynnBW.