Financial Impact of a Capitation Matrix System on Total Knee and Total Hip Arthroplasty

Total hip and total knee arthroplasty are high-volume surgical procedures that have a substantial economic impact for the healthcare system. This study analyzes the financial effect of a capitation matrix system on total knee and total hip implant costs over a 1-year period at a community hospital system. The matrix implant levels were based on implant characteristics, correlating increased technological sophistication of the various implants with increased but capitated payment to vendors. In the first year after the implementation of the matrix system, implant costs for the hospital decreased by 26.1% per implant for 369 total hip procedures and also by 26.1% per implant for 934 total knee procedures.