A new article in the Harvard Business Review examined why large national companies — including Walmart and General Electric — are negotiating bundled payments with healthcare providers, oftentimes offering to send employees hundreds of miles away for medical care at quality institutions for a cost savings.
Here are eight key points from the article:
1. Healthcare costs can vary significantly between providers — in some cases up to 40 percent — for the same services. As a result, large companies are partnering with organizations such as Pacific Business Group on Health and Health Design Plus to launch the Employers Centers of Excellence Networks which identifies quality providers and develops bundled payment contracts with them.
2. Danville, Pa.-based Geisinger Health System is one such institution that began partnering with companies for cardiac surgery bundles in 2012 and spine surgery in 2015. The health system's ProvenCare program enacted process-improvement methodology that prepared the health system for cardiac and spine bundles.
3. The path to become a center of excellence is strenuous; PBGH and HDP must first request information from the health system and conduct an introductory phone call before requesting a care proposal. The health systems must provide information on clinical protocols, patient selection criteria, registry participation, shared decisionmaking between multidisciplinary providers and key performance metrics. The initial steps are followed by a site visit and negotiated prospective bundled rates.
4. The bundled payment rates for contracting companies are typically 10 to 15 percent less than the standard fee-for-service, but Geisinger has seen an increase in patient volume through the partnership.
5. Health systems reporting specialty-specific patient reported outcomes are attractive for employer-purchasers. The health system must also have administrative leaders to direct new care pathways as well as business development, contracting and finance personnel to support the bundles. Nurse navigators and program coordinators are also an integral part of the program.
6. So far, the centers of excellence have saved $3,300 in copayments for the average Lowe's associate undergoing joint replacements when compared with patients undergoing care with traditional insurance. All of the Lowe's associates who underwent joint replacement surgery as part of the program reported they would refer coworkers or family members for the surgery.
7. Post-surgery care has a significant impact on the overall cost of care. One-year data comparing Lowe's associates in the program with local providers who accepted traditional insurance found 9.1 percent of the patients were discharged to skilled nursing facilities after total joint replacements when they saw local providers; none of the patients who had joint replacements at the centers of excellence were discharged to skilled nursing facilities.
Among the lumbar spine surgery patients, 5.9 percent of Lowe's associates who had surgery with local providers needed skilled nursing postoperatively; none of the centers of excellence patients needed skilled nursing.
8. Data shows 6.6 percent of the Lowe's associates who underwent surgery in traditional plans were readmitted to the hospital within 30 days, compared to 0.4 percent of centers of excellence patients. The savings from unnecessary surgery was calculated at $1.3 million; specifically in spine, 52 percent of the patients who received surgical recommendations from home providers were not recognized as appropriate surgical candidates by the centers of excellence providers.
"There is a growing need for healthcare delivery systems prepared to participate in these initiatives," concluded the article authors. "Given the value to patients, providers and care purchasers, systems would be well served to recognize the value of capitalizing on these opportunities."