Hospitals Lower Prices for Bundles With Big Employers, But Gain Elsewhere

In direct contracting arrangements with major employers, hospitals are willing to make some sacrifices to secure a steady stream of patients they otherwise wouldn't treat, according to a Bloomberg News report.

In some cases, hospitals will drop prices up to 40 percent for some direct contracting deals, Terry White, president of Denver-based benefit manager BridgeHealth Medical, said in the report.

Cleveland Clinic has become one of the poster children for these types of deals, as it has partnerships with more than a half-dozen large employers, according to the report. As part of the arrangement it struck with Lowe's in 2011, the health system bundles all costs for heart surgery under one negotiated price and offers a clinical expertise that results in virtually no variations in patient outcomes.

Lowe's, through its health plan, then covers the full cost of the surgery at that negotiated price, along with travel and lodging costs for an employee and a relative. More than 60 employees have taken part in the program since it started, according to the report.
Susan Connolly, a partner at Mercer in Boston who specializes in clinical consulting, noted in the report that providers are "very interested in extending their market share nationally." By contracting with large, nationwide companies like Lowe's or Wal-Mart Stores, health systems know they are going to get "a lot of volume because they're so big."

Michael McMillan, Cleveland Clinic's executive director of market and network services, called these arrangements "win-win-win" for patients, employers and hospitals. "The patient has no out-of-pocket responsibility, employers have a better long-term financial result and we get patients," he said in the report.

More Articles on Hospitals and Employers:
Population Health Management: Hospitals' Changing Employer Role
What Makes a Hospital Attractive to Employers?
Will 2014 Bring the Decline of Employer-Sponsored Health Insurance?


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