Bundled payments are part of new reimbursement models under healthcare reform that pay a lump sum to healthcare providers who share the risks and benefits of care delivery for a particular procedure or condition. Much of the discussion on bundled payments has focused on benefits from improving quality and lowering costs. However, there are other opportunities that bundled payments present, particularly for hospital orthopedic programs, according to Djamel Bayliche, vice president at Corazon, a national consulting firm for healthcare service lines. 
The basis of a center of excellence
Achieving shared savings under a bundled payment model requires healthcare providers work together to standardize care, improve quality and increase efficiency. By standardizing care, providers can not only increase predictability, but can also improve care and create a better patient experience. These four attributes — quality care, teamwork between the hospital and physicians, patient experience and process efficiency — are the fundamental building blocks of a center of excellence, Mr. Bayliche says. He calls this framework "QP3," an easy term to remember for quality care, physician relations, patient experience and process efficiency.
A collaborative relationship between hospital administration and physicians enables the team to improve quality, patient experience and efficiency, which distinguishes an orthopedic center of excellence from a typical orthopedic program, according to Mr. Bayliche. "Most hospitals can perform a knee or hip replacement surgery. What differentiates one program from another is quality, consistency of care and the patient experience," he says. "Bundled payments can be a catalyst to creating the necessary change in hospital orthopedic programs."
Quality outcomes: Improving patient outcomes
Since a significant portion of the savings under bundled payments will come from efficiencies gained through consistent processes, bundled payments create an opportunity to incentivize physicians and other providers to work together to standardize care, Mr. Bayliche says.
Consistent processes can enhance the quality of care and improve outcomes. "If you perform tasks with consistency, you have a better chance of controlling quality," Mr. Bayliche says. For example, creating standard protocols for orthopedic surgery ensures every provider knows what to expect for each step of the process, thus reducing the likelihood of missing important steps in the process. These steps can range from properly identifying the patient and marking the site for surgery to making a wheelchair available when the patient is ready to leave the hospital.
Improving quality makes care safer and attracts more patients to the hospital, which can add the case volume necessary to move the hospital closer on the path to a center of excellence.
Physician relations: Collaboration fosters improvement
The bundled payment structure of a lump sum payment and shared savings provides an incentive for physicians and non-physicians in a hospital to work together. "Bundled payments can create an environment for hospitals to connect with their surgeons in meaningful ways because they provide an opportunity to have aligned goals, where everybody is on the same team with a common vision," Mr. Bayliche says.
The bundled payment model can also help engage other providers on the orthopedic team, such as rehab specialists, anesthesiologists and physician assistants. A multidisciplinary team with a shared goal is a staple of centers of excellence, as they ensure all needs of a patient are met by the various providers and that care is coordinated across the full continuum.
Patient experience: Treating patients like guests
Bundled payments can also help providers improve patient experience through standardization. As providers standardize their practices, patients' visits become more predictable and therefore comfortable, because patients know what to expect. Consistent processes also reduce duplication, creating a streamlined experience for patients (e.g., not asking the patient the same questions multiple times).
Mr. Bayliche says hospitals can improve patient experience in orthopedics by treating patients as guests rather than sick individuals. "Most orthopedic patients are well individuals with a musculoskeletal problem," he says. He suggests creating a healthy environment with hotel/resort-like amenities (e.g., street clothes and room service menus) to help alleviate patient anxiety and improve care. The improved patient experience moves the hospital's orthopedic program a step closer to becoming a center of excellence.
Process efficiency: Standardization speeds processes, lowers costs
Standards that are developed under a bundled payment model also improve process efficiency. For example, Mr. Bayliche says a proficient orthopedic surgeon should be able to perform a particular procedure, such as a knee replacement, in a consistent sequence of steps with consistent staff and other support resources. This consistency creates more consistency in scheduling and more efficiency in throughput with minimal delays, leading to cost savings and the ability for the surgeon to perform more cases.
Another area where bundled payments can drive standard processes in orthopedics is in the use of implantable devices. "Now the surgeon, hospital and other players are on the same team; they're in a better negotiating position when talking to vendors, specifically implant vendors," Mr. Bayliche says. Everyone on the orthopedics team is motivated to improve staff skills, lower costs and share in additional savings by establishing standards for implant use. By agreeing to a standard set of vendors and types of implants for a certain procedure, the team can benefit from economies of scale and receive larger discounts from vendors.
In addition to cost savings, standardizing implants can improve efficiency and quality of care. Clinicians and staff who perform sterilization would not have to manage multiple types of implants, most of which may have different manufacturing guidelines for setup, use and cleaning. Implant standardization would thus reduce the amount of staff training needed, Mr. Bayliche says.
Bundled payments open the door to improving care efficiency and consistency, and create an environment for hospital orthopedic programs to move further along the path to a center of excellence.
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The basis of a center of excellenceAchieving shared savings under a bundled payment model requires healthcare providers work together to standardize care, improve quality and increase efficiency. By standardizing care, providers can not only increase predictability, but can also improve care and create a better patient experience. These four attributes — quality care, teamwork between the hospital and physicians, patient experience and process efficiency — are the fundamental building blocks of a center of excellence, Mr. Bayliche says. He calls this framework "QP3," an easy term to remember for quality care, physician relations, patient experience and process efficiency.
A collaborative relationship between hospital administration and physicians enables the team to improve quality, patient experience and efficiency, which distinguishes an orthopedic center of excellence from a typical orthopedic program, according to Mr. Bayliche. "Most hospitals can perform a knee or hip replacement surgery. What differentiates one program from another is quality, consistency of care and the patient experience," he says. "Bundled payments can be a catalyst to creating the necessary change in hospital orthopedic programs."
Quality outcomes: Improving patient outcomes
Since a significant portion of the savings under bundled payments will come from efficiencies gained through consistent processes, bundled payments create an opportunity to incentivize physicians and other providers to work together to standardize care, Mr. Bayliche says.
Consistent processes can enhance the quality of care and improve outcomes. "If you perform tasks with consistency, you have a better chance of controlling quality," Mr. Bayliche says. For example, creating standard protocols for orthopedic surgery ensures every provider knows what to expect for each step of the process, thus reducing the likelihood of missing important steps in the process. These steps can range from properly identifying the patient and marking the site for surgery to making a wheelchair available when the patient is ready to leave the hospital.
Improving quality makes care safer and attracts more patients to the hospital, which can add the case volume necessary to move the hospital closer on the path to a center of excellence.
Physician relations: Collaboration fosters improvement
The bundled payment structure of a lump sum payment and shared savings provides an incentive for physicians and non-physicians in a hospital to work together. "Bundled payments can create an environment for hospitals to connect with their surgeons in meaningful ways because they provide an opportunity to have aligned goals, where everybody is on the same team with a common vision," Mr. Bayliche says.
The bundled payment model can also help engage other providers on the orthopedic team, such as rehab specialists, anesthesiologists and physician assistants. A multidisciplinary team with a shared goal is a staple of centers of excellence, as they ensure all needs of a patient are met by the various providers and that care is coordinated across the full continuum.
Patient experience: Treating patients like guests
Bundled payments can also help providers improve patient experience through standardization. As providers standardize their practices, patients' visits become more predictable and therefore comfortable, because patients know what to expect. Consistent processes also reduce duplication, creating a streamlined experience for patients (e.g., not asking the patient the same questions multiple times).
Mr. Bayliche says hospitals can improve patient experience in orthopedics by treating patients as guests rather than sick individuals. "Most orthopedic patients are well individuals with a musculoskeletal problem," he says. He suggests creating a healthy environment with hotel/resort-like amenities (e.g., street clothes and room service menus) to help alleviate patient anxiety and improve care. The improved patient experience moves the hospital's orthopedic program a step closer to becoming a center of excellence.
Process efficiency: Standardization speeds processes, lowers costs
Standards that are developed under a bundled payment model also improve process efficiency. For example, Mr. Bayliche says a proficient orthopedic surgeon should be able to perform a particular procedure, such as a knee replacement, in a consistent sequence of steps with consistent staff and other support resources. This consistency creates more consistency in scheduling and more efficiency in throughput with minimal delays, leading to cost savings and the ability for the surgeon to perform more cases.
Another area where bundled payments can drive standard processes in orthopedics is in the use of implantable devices. "Now the surgeon, hospital and other players are on the same team; they're in a better negotiating position when talking to vendors, specifically implant vendors," Mr. Bayliche says. Everyone on the orthopedics team is motivated to improve staff skills, lower costs and share in additional savings by establishing standards for implant use. By agreeing to a standard set of vendors and types of implants for a certain procedure, the team can benefit from economies of scale and receive larger discounts from vendors.
In addition to cost savings, standardizing implants can improve efficiency and quality of care. Clinicians and staff who perform sterilization would not have to manage multiple types of implants, most of which may have different manufacturing guidelines for setup, use and cleaning. Implant standardization would thus reduce the amount of staff training needed, Mr. Bayliche says.
Bundled payments open the door to improving care efficiency and consistency, and create an environment for hospital orthopedic programs to move further along the path to a center of excellence.
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