Does Learning Matter for Knee Replacement Surgeries? Data Evidence from a German Hospital

In 2003, Germany will be the first country in the world to adopt a fully prospective payment system for the reimbursement of all inpatient hospital services. To face the increasing competition, hospitals can pursue either a specialization or a cost and quality leadership strategy. It stands to reason that organizational and individual learning will play an important role for both strategies. This paper raises the question, whether results from traditional learning curve theory can be applied to surgical procedures despite the latter's heterogeneity. We develop a theoretical model of surgical learning and test it using detailed operating room data from the first 601 total knee replacement surgeries of a small German hospital between 1994–2000. Our results suggest that classical learning curve theory can indeed be applied to this high cost high volume procedure.