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What are the economic consequences of unplanned readmissions after TKA?
R Carter Clement1, Michael M Kheir, Peter B Derman
1University of North Carolina School of Medicine, Chapel Hill, NC, USA.
Background:
In 2009, the Center for Medicare & Medicaid Services (CMS) began penalizing hospitals with high rates of 30-day readmissions after hospitalizations for certain conditions. This policy will expand to include TKA in 2015.
Questions/Purposes:
What are the median profits and contribution margins of: (1) Medicare-reimbursed TKA, (2) 30-day TKA readmission, and (3) entire episode of care for readmitted TKA patients within 30 days compared to nonreadmitted patients? (4) Under new CMS guidelines, what financial penalty will the authors' institution face if its arthroplasty readmission rate exceeds the national average?
Methods:
A retrospective review of 3218 primary TKAs performed during 2 years at a large urban academic hospital network was conducted using administrative and financial data.
Results:
The median profit and contribution margins, respectively, were as follows: TKA episode, USD 5209 and USD 11,726; 30-day readmission, USD 608 and USD 3814; TKA visit with readmission, USD 2855 and USD 13,901; TKA visit without readmission, USD 5300 and USD 11,652. Readmission penalties could reach USD 6.21 million per year for the authors' institution.
Discussion:
If our results are generalizable, unplanned TKA readmissions lead to diminished total profit. Although associated with a positive contribution margin, this is likely to be a short-term phenomenon as the new CMS policy will result in readmissions coming at a steep cost to referral centers.
Insights
Unplanned total knee arthroplasty (TKA) readmissions reduce overall hospital profits, despite initial positive margins. New CMS penalties will significantly increase costs for hospitals exceeding readmission rates.
Area of Science:
- Orthopedic Surgery
- Health Economics
- Healthcare Policy
Background:
- The Center for Medicare & Medicaid Services (CMS) implemented penalties for high 30-day hospital readmission rates in 2009.
- These penalties are set to include total knee arthroplasty (TKA) in 2015, impacting hospital finances.
Purpose of the Study:
- To determine the median profits and contribution margins for Medicare-reimbursed TKA, 30-day readmissions, and the entire episode of care.
- To compare financial outcomes for TKA patients with and without 30-day readmissions.
- To estimate the financial penalty an institution might face under new CMS guidelines for exceeding the national arthroplasty readmission rate.
Main Methods:
- A retrospective review of 3218 primary TKAs was conducted over two years.
- Administrative and financial data from a large urban academic hospital network were analyzed.
Main Results:
- The median profit for a TKA episode was $5209 (contribution margin: $11,726).
- A 30-day TKA readmission yielded a median profit of $608 (contribution margin: $3814).
- The authors' institution could face annual penalties of up to $6.21 million if its readmission rate surpasses the national average.
Conclusions:
- Unplanned TKA readmissions diminish total hospital profit, even with an initial positive contribution margin.
- The new CMS policy signifies that readmissions will incur substantial costs for referral centers, impacting long-term financial viability.
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