The Direct and Indirect Costs to Society of Treatment for End-Stage Knee Osteoarthritis

Background: Although total knee arthroplasty for end-stage osteoarthritis is a cost-effective procedure, payers are focusing on its indications and cost because of its high and growing use. Improvements in pain and physical function from total knee arthroplasty could yield benefits in the form of increased work life and lower disability payments. The purpose of this study was to estimate the value of total knee arthroplasty from a societal perspective, including the costs and benefits to patients, employers, and payers. Methods: A Markov model was used to estimate the value of total knee arthroplasty for patients with end-stage osteoarthritis of the knee by comparing direct and indirect costs between surgical and nonsurgical treatment scenarios. Direct costs included all medical costs for surgical and nonsurgical treatment of osteoarthritis of the knee. Indirect costs were related to lost wages due to an inability to work, lower earnings, or receipt of disability payments. Direct and indirect costs and quality-of-life measures were incorporated into the Markov model to estimate the impact of total knee arthroplasty on costs over patients' lifetimes and quality-adjusted life years. The assumptions used in the model were developed with use of claims and survey data as well as clinical expert opinion and the peer-reviewed literature. Results: Compared with nonsurgical treatment, total knee arthroplasty increased lifetime direct costs by a mean of $20,635 (net present value in 2009 U.S. dollars). These costs were offset by societal savings of $39,565 from reduced indirect costs, resulting in a lifetime societal net benefit from total knee arthroplasty of $18,930 per patient. Eighty-five percent of these savings originated from increased employment and earnings, with the remaining 15% from fewer missed workdays and lower disability payments. Conclusions: The estimated lifetime societal savings from the more than 600,000 total knee arthroplasties performed in the U.S. in 2009 were estimated to be approximately $12 billion. These societal savings primarily accrued to patients and employers. The study demonstrates the importance of a societal perspective when considering the costs and benefits of total knee arthroplasty and policies that will affect access to this procedure.