4 Key Considerations for Transitioning to Bundled Payments

Moore Clinic in Columbia, S.C., runs with the efficiency of a manufacturing plant.

During a session at the Becker’s Hospital Review 4th Annual Meeting in Chicago on May 9, attendees learned that like a factory, the orthopedic “hospital within a hospital” is broken down into small, specialized components within the larger organization, allowing each physician to operate as if it was his or her own practice, with dedicated nurses, telephones and even billing codes. This structure has reduced wait times from two hours to 15 minutes, and has increased both quality of care and patient satisfaction.

This organizational structure did put parent hospital Columbia, S.C.-based Providence Hospital Northeast in an unusual position during the transition to a bundled payment model. A typo on a slide, “Bungled Payment,” seemed to represent the hospital’s initial difficultly in adopting what the presenters agreed was the model of the future.

During the session, Sean McNally, CEO of the Moore Clinic and president of Providence Hospital Northeast, W. Ryan Hall, vice president and administrator of Providence Hospital Northeast, and Larry Taylor, CEO and president of Practice Partners in Healthcare in Birmingham, Ala., discussed three best practices learned from their experience transitioning to a bundled payment model.

1. Choose the most appropriate bundled payment model. Mr. McNally stressed the importance of choosing the right bundled payment model that fit the needs and existing structure of the hospital.  “You really need to vet out which one is best for you,” he said. Model 4, which focuses on the inpatient stay and makes hospitals responsible for related readmissions, was determined to be the most appropriate for Providence Hospital Northeast, but he stressed both the importance of this decision and the impending Patient Protection and Affordable Care Act-mandated deadline of July. 

2. Understand the real costs, and the real value. The presenters acknowledged that figuring out the real cost of any procedure is often a daunting task. Mr. Hall recommends partnering with someone in the finance department to get “a real account of all costs,” he said. He was quick to note that this is only half the battle, as hospital administrators then have to “decide what value each element is bringing,” to determine where cuts can be responsibly made. 

3. Engage with physicians. “Physicians do really want to know the costs,” said Mr. Hall. He noted that physicians help to bring insight into the value of each element involved in a procedure. “Just focusing on the numbers can cause problems; it’s important to have a clinician at the table,” said Mr. Hall.

Consulting with physicians has been beneficial to the hospital’s bottom line— Providence Hospital Northeast was able to standardize implants and bring the number of vendors down from seven to two, saving $800 to $1,200 per implant without sacrificing quality.

4. Establish benchmarks. The presenters also emphasized the importance of establishing benchmarks to measure success and keep the hospital on a track to improvement. Benchmarks for physicians should be established as well, the presenters said, to help increase efficiency on a per-procedure basis while keeping costs down.

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