Exploring the cost of knee replacement surgery

Knee replacement surgery—also commonly referred to as knee arthroplasty—is a substantial medical intervention for individuals suffering from severe knee pain and disability due to conditions like osteoarthritis, rheumatoid arthritis, or traumatic injury.

Over the past several years, musculoskeletal costs (MSK) have become a top driver of employer healthcare spend, often landing in one of the top three spots. The cost of knee replacement surgery and similar procedures are a major contributor.

What is knee replacement surgery?

Knee replacement surgery involves removing the damaged cartilage and bone from the surface of the knee joint and replacing it with a metal and plastic implant. The procedure can be categorized into two types: total knee replacement (TKR) and partial knee replacement (PKR).

• Total knee replacement (TKR): The most common form of knee replacement surgery, in a TKR the entire joint is replaced with a prosthetic implant. It’s generally recommended for patients with extensive damage to the knee joint.
• Partial knee replacement (PKR): Also called unicompartmenal knee replacement, this involves replacing only the damaged part of the knee. It’s suitable for patients with damage confined to a specific area of the knee, such as the medial, lateral, or patellofemoral compartments.

A knee replacement surgery typically lasts about one to two hours and is sometimes followed by a hospital stay of one to three days. Post-operative rehabilitation is crucial, as it helps patients regain mobility and strength.

How common is knee replacement surgery? 

Knee replacements are one of the most common surgeries in the country. According to the American College of Rheumatology, surgeons in the U.S. perform almost 800,000 total knee replacements annually. Over the past decade, the average age of knee replacement patients has decreased from 68 to 66 years old.

What is the average cost of knee replacement surgery?

According to the National Institutes of Health, the average cost of knee replacement surgery in the United States is approximately $20,000. Unfortunately, it’s no surprise that the U.S. has the highest average cost for this procedure when compared to other countries. For example: In Europe, the average cost is $16,000; in China, it’s $14,000; in Australia and Canada it’s $13,000; and in India it’s $3,500.

However, $20,000 is still very much on the low end when you consider other studies, which estimate that the median cost of knee replacement surgery in the U.S. is $68,016 with the high end of the range landing around $200,000—and that’s for surgeries without complications.

Why does the cost of knee replacement surgery vary?

The cost of knee replacement surgery can vary widely depending on factors such as:

• Hospital setting: Costs may differ between inpatient procedures performed in a hospital setting and outpatient procedures performed in ambulatory surgical centers. Each day of inpatient stay can add thousands of dollars to the total cost.
• Geographical location: Healthcare costs vary significantly depending on the region, with urban areas generally having higher costs compared to rural areas. Costs can vary greatly between different states, too. For example, the average cost of knee placement surgery at an outpatient hospital in Alaska is $22,873; in West Virginia, it’s $18,052, and in Iowa it’s $16,089.
• Insurance coverage: Insurance coverage plays a crucial role in determining out-of-pocket expenses for patients, with factors such as deductibles, copayments, and coverage limits influencing the final cost.

What components contribute to the cost of knee replacement surgery?

The total cost of knee replacement surgery encompasses several components:

Pre-surgery costs

Before the actual surgery, patients incur several costs related to diagnosis and preparation, including:

• Consultations and diagnostic tests: Consultations with orthopedic surgeons, x-rays, MRI scans, and blood tests.
• Preoperative appointments: Additional consultations and medical clearances from other providers.

Surgery costs

The main expense is the surgery itself, which encompasses several components:

• Hospital charges: These are often the most significant part of the cost, covering the operating room, nursing care, and hospital stay (if inpatient). As of 2022, in the United States, the average cost of one night in the hospital was $3,025, with the highest daily cost being in California ($4,337) and the lowest being in Mississippi ($1,425).
• Knee implant fees: The cost of the actual implant (or prosthesis) used in the surgery can be anywhere from $1,800 to $12,000.

• Anesthesia fees: In most cases, patients undergoing a knee replacement are under anesthesis for the entirety of the procedure. This can cost anywhere from a few hundred dollars to a few thousand.

Post-Surgery Costs

Post-operative care is critical for recovery and includes various expenses such as rehabilitation and physical therapy, medication for pain, anticoagulants to prevent blood costs, and follow-up visits with the surgeon.

Centers of excellence programs: Getting control over the cost of knee replacement surgery

Given how expensive the cost of knee placement surgery is and how widely the costs can vary, it’s no wonder employers are looking for help with controlling their MSK expenditure. Partnering with a value-based centers of excellence (COE) program like Carrum Health is one of the most effective solutions.

Value-based COE programs incentivize less-invasive treatments, discourage unnecessary surgical intervention, and successfully reduce readmissions and complications, all of which results in lower costs and better health outcomes. A study by the RAND corporation, for instance, found that Carrum directs 30% of surgery candidates to more conservative care and reduces readmissions by 80% when compared to the national average.

In addition, for surgeries like knee replacements, Carrum leverages a bundled payments approach, meaning all of the costs associated with the surgery—diagnostic tests, IV drugs, surgery supplies, hospital or facility stay, post-surgery medications, the surgery itself, and post-acute care—are included in one pre-negotiated upfront price. The RAND Corporation also found that Carrum saves employers an average of 45% per procedure.

Embracing innovative solutions such as a value-based COE program will help employers better predict and manage their spend on knee replacement surgeries—while still ensuring employees and their families still receive high-quality care.

The information contained on this page is for informational purposes only. No material is intended to be a substitute for professional medical advice, diagnosis, or treatment.