How to overcome 3 major hurdles to surgical bundle success

As the healthcare industry transitions toward a value-based payment system, risk-based models like bundled payments are gaining speed. Although the recent Republican sweep of the White House and Congress could lead to major health policy changes in 2017, it is unlikely Medicare's bundled payment programs will come to an end.

Bundled payments are "basically politically agnostic," said Jeff Peters, CEO of Surgical Directions, during a Nov. 15 webinar sponsored by Surgical Directions and hosted by Becker's Hospital Review. Although the specifics of CMS' bundled payment initiatives may change in the future, Mr. Peters expects the programs to remain in place.

Bundled payment models are not limited to those launched by the federal government. "A lot of commercial payers are moving to bundled payments because they see the value in not only reducing costs…but also showing they're doing a good job of taking care of patients," said Mr. Peters.

Both Medicare and commercial payers are migrating toward bundled payments for surgical care. CMS showed it was serious about the transition to value-based models in July 2015, when it announced the Comprehensive Care for Joint Replacement Model — Medicare's first mandatory bundled payment model. About 800 hospitals across the U.S. are participating in the five-year CJR program, which focuses on lower extremity joint replacements.

Common bundled payment problems
During the webinar, Mr. Peters discussed challenges hospitals face in implementing surgical bundles. Below are three of the most common problems hospitals encounter, and solutions to remedy them, according to Mr. Peters.

Problem No. 1: Surgeon outliers in spending. To achieve success under bundled payment initiatives it is vital for hospitals to provide high-quality care and keep costs down. Through variation in cost of care, surgeon outliers can hamper a hospital's ability to achieve cost savings.

For example, under CJR, the episode of care includes any services the patient receives 72 hours prior to admission, services during the acute stay and any services during the 90-day post-acute period. Hospitals that spend less than the target price for the episode of care while meeting or exceeding quality standards keep the savings achieved. A hospital is required to repay Medicare if the costs exceed the target price. Physician outliers can cause hospitals to miss out on savings by driving costs higher.

Solution: To address this issue, Mr. Peters said open communication is critical. "You certainly show the physician the information and show the physician that they're an outlier," he said. Once that information is shared, hospital leadership and the physician can begin to address the factors contributing to the physician's high cost per case. For instance, if high-cost joint implants are the problem, the hospital can negotiate with vendors to bring down the price of the implant or the physician can switch to a less costly device that offers similar clinical outcomes.

Problem No. 2: Poor OR efficiency. To remain financially viable under bundled payment models, hospitals must achieve efficiency in the operating room. A slight delay in a case's start time and lengthy turnover are just a few of the factors that can cause hospitals to fall short in this area.

Solution: "Better performing organizations have a collaborative OR governance structure," said Mr. Peters. This involves the hospital's senior leadership coming together with surgical, nursing and anesthesia leaders to align incentives and serve as an operating committee for all aspects of perioperative services. "You have to weave bundled payments into day-to-day operations of the OR," said Mr. Peters.  

Problem No. 3: Variation in SNF length of stay. Skilled nursing facility reimbursement is on a per diem basis, meaning the cost of care incrementally increases with each day the patient is in the SNF. Since surgical bundles cover the post-discharge period, including time spent at a rehab facility, it is vital for hospitals to do all they can to mitigate length of stay.

Solution: Reducing the amount of a time a patient spends in a SNF requires an analysis of each patient's case. For instance, hospitals should analyze whether it's better from a cost and quality perspective to immediately discharge the patient to a rehab facility or keep the patient in the hospital a few extra days and discharge to home. "It makes us rethink some of the processes that have been engrained in us as healthcare providers," said Mr. Peters.

 To listen to the webinar recording, click here.

To view the webinar slides, click here

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