Objectives To evaluate the impact of total knee replacement on quality of life in people with knee osteoarthritis and to estimate associated differences in lifetime costs and quality adjusted life years (QALYs) according to use by level of symptoms.Design Marginal structural modeling and cost effectiveness analysis based on lifetime predictions for total knee replacement and death from population based cohort data.Setting Data from two studies-Osteoarthritis Initiative (OAI) and the Multicenter Osteoarthritis Study (MOST)-within the US health system.Participants 4498 participants with or at high risk for knee osteoarthritis aged 45-79 from the OAI with no previous knee replacement (confirmed by baseline radiography) followed up for nine years. Validation cohort comprised 2907 patients from MOST with two year follow-up.Intervention Scenarios ranging from current practice, defined as total knee replacement practice as performed in the OAI (with procedural rates estimated by a prediction model), to practice limited to patients with severe symptoms to no surgery.Main outcome measures Generic (SF-12) and osteoarthritis specific quality of life measured over 96 months, model based QALYs, costs, and incremental cost effectiveness ratios over a lifetime horizon.Results In the OAI, total knee replacement showed improvements in quality of life with small absolute changes when averaged across levels of confounding variables: 1.70 (95% uncertainty interval 0.26 to 3.57) for SF-12 physical component summary (PCS); -10.69 (-13.39 to -8.01) for Western Ontario and McMaster Universities arthritis index (WOMAC); and 9.16 (6.35 to 12.49) for knee injury and osteoarthritis outcome score (KOOS) quality of life subscale. These improvements became larger with decreasing functional status at baseline. Provision of total knee replacement to patients with SF-12 PCS scores <35 was the optimal scenario given a cost effectiveness threshold of $200 000/QALY, with cost savings of $6974 ($5789 to $8269) and a minimal loss of 0.008 (-0.056 to 0.043) QALYs compared with current practice. These findings were reproduced among patients with knee osteoarthritis from the MOST cohort and were robust against various scenarios including increased rates of total knee replacement and mortality and inclusion of non-healthcare costs but were sensitive to increased deterioration in quality of life without surgery. In a threshold analysis, total knee replacement would become cost effective in patients with SF-12 PCS scores ≤40 if the associated hospital admission costs fell below $14 000 given a cost effectiveness threshold of $200 000/QALY.Conclusion Current practice of total knee replacement as performed in a recent US cohort of patients with knee osteoarthritis had minimal effects on quality of life and QALYs at the group level. If the procedure were restricted to more severely affected patients, its effectiveness would rise, with practice becoming economically more attractive than its current use.

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