August 05, 2013,(chicagobusiness.com)–The New York Times this weekend published a long feature on medical tourismthat is both a cautionary tale on medical spending as well as a demonstration of the huge economic impact that medical manufacturers can have in the towns they’re based — including one in Indiana.The Northern Indiana town of Warsaw (pop. 14,000) is home to the headquarters of three medical device manufacturers — Zimmer, Biomet and DePuy, a division of Johnson & Johnson — and has trademarked itself the Orthopedic Capital of the World.
“An industry that began as a splint-making shop in 1895 has made Warsaw the center of a global multibillion-dollar business,” the Times writes. “The companies based here produce about 60 percent of the hip and knee devices used in the United States and one-third of the world’s orthopedic sales volume, local officials said. Nearly half the jobs in Kosciusko County, where Warsaw is, are tied to the industry. Residents joke that a mixed marriage is when one spouse works for Zimmer and the other for DePuy.”
The industry’s benefits “are evident,” the Times continues. “The county has the lowest unemployment rate in Northern Indiana, and the median family income of $50,000 puts it significantly above the state average. The town boasts lush golf courses and streets lined with spacious homes. The lobby of the elegant City Hall, which is in a restored 1912 bank, features plaques about device manufacturers.” One resident tells the Times, “We eat, sleep and breathe orthopedics.”
What’s good for Warsaw, however, is often bad for Americans struggling to pay for the devices that the town’s companies manufacture. “The cost of medical devices like joint implants, pacemakers and artificial urinary valves” is far more in the U.S., the Times writes, than in other countries.Nearly all hip and knee implants in the U.S. are made by five companies — including the three based in Warsaw — “which some economists describe as a cartel,” the Times writes. “Manufacturers tweak old models and patent the changes as new products, with ever-bigger price tags.”
Warsaw’s companies defend the prices to the Times. The head of OrthoWorx, a local trade group in Warsaw, tells reporter Elisabeth Rosenthal that high prices reflect “the increasing complexity of the joint implant business, including more advanced materials, new regulatory requirements and the logistics of providing a now huge array of devices.”
The story has garnered more than 800 comments so far; most written by people who appear unconvinced by the manufacturers’ justifications for the high prices. “As an orthopedic surgeon, I agree with several points made in the article,” one person writes. “Implant costs (not only hips and knees but also spinal implants, pacemakers as well as just about anything surgically implanted) are exceptionally high in the U.S. Same implant in Canada costs half of what it costs in the U.S.”
Another commenter writes, “Medical pricing in this country is insane. There can be no normal supply and demand for these type of services, which alone would distort prices . . . It’s hard to figure out who benefits from the current system, other than apparently the medical device manufacturers.”
Source: http://www.chicagobusiness.com/article/20130805/BLOGS08/130809911/how-hip-implant-cartel-helps-northern-indiana
How hip implant ‘cartel’ helps Northern Indiana
(Visited 1 times, 1 visits today)