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Physician-led Bundled Payment Programs: Key thoughts to get there by 2020

While bundled payments seem simple in theory, execution is complex and very few organizations are doing it well.

At Becker's 17th Annual Future of Spine + The Spine, Orthopedic and Pain Management-Driven ASC Conference in Chicago, Regent Surgical Health hosted a workshop to explore the bundled payment landscape and to highlight lessons learned by Regent’s bundled payment team and Oregon Surgical Select – a surgeon owned entity that contracts for bundles and manages the episodes of care..

Why bundled payments and why now?

CMS launched the Bundled Payments for Care Improvement (BPCI) program in 2013 to kick-start a move to value-based care. Commercial insurers have observed the results of BPCI and are ready to explore their own bundles. In some cases, payers have begun to negotiate bundled rates with providers, but many are still unsure how to proceed.

Total joint and spine procedures may be good candidates for bundled payments because they are high volume, elective procedures and most are done in hospitals. Shifting these surgeries to ASCs represents a huge opportunity.

James Ballard, MD, an orthopedic total joint surgeon and one of the founders of Oregon Surgical Select said, "The demand for total hip and total knee procedures is increasing; 2020 is the inflection point where volume is expected to go up radically. Surgeons should seize the opportunity, but it requires thinking outside the box."

One challenge is that no universal definition exists about what constitutes a bundle. "The bundles we want to lean toward pay prospectively and are full, at-risk bundles which include readmission and post-acute care, as well as everything for the day of surgery," said Chris Stine, director of bundled payments at Regent Surgical Health.

Bundled services must be a surgeon-led effort

To succeed with total joint and spine bundles, surgeons may need to go outside their core group. Christopher Nanson, MD, an orthopedic total joint surgeon at OSI, said, "You must find surgeons who generate value at volume. This means looking at your environment and competitors in a different light. You need to find the 'like minds.' When I met Dr. Ballard, despite working in competing practices, we believed we could work together to improve outcomes by collaborating and standardizing our protocols to deliver high quality outcomes at a lower cost."

Surgeons have traditionally worked in a zero-sum game environment. The right bundle payment model can flip this norm, and incentivize physicians to collaborate and develop quality, cost-effective solutions. "If we abdicate responsibility, hospitals or payers will create solutions. It behooves us to take control. We believe fundamentally that outpatient surgery combined with bundled payment programs are the answer," said Dr. Ballard.

Business expertise is an essential ingredient for success

Creating an ASC to support total joint and spine bundles also means finding a partner to handle the business aspect of the operation. Regent Surgical Health worked with a few of the partners of OSI to create a separate legal entity called Oregon Surgical Select that organized eight of the busiest Portland-area joint surgeons from seven practices.

"While I'm good at surgery, I need someone to run the business end of things which is a huge part of this. The first 90 percent of the heavy lifting was on Regent's end, figuring out how to form the legal structure and contract with payers," said Dr. Nanson.

On the clinical side, surgeons designed an ASC called Oregon Surgical Institute to specifically handle complex cases like joint replacements and spinal fusions. The team is aligned on every aspect of the bundle and designed and adopted one pathway for total hip replacements and one for total knees. There are no deviations allowed with the surgeons agreeing to a single pathway that they consistently review as a group for potential improvements.

Consolidation and standardization create value for patients and payers alike. "Patients hear the same message no matter who their surgeon is. A common patient engagement tool lets us pursue evidence-based practice," said Dr. Ballard.

Payers also understand the power of alternative payment models. "We are now doing 90-day at-risk bundles very successfully. Getting the first contract was challenging, but we expect at least two more contracts by the end of the year," explained Mr. Stine.


“The first step in developing bundled payments is to identify the market inefficiencies within the hospitals, payers and surgeons and make sure you can align incentives to eliminate waste in the clinical pathway,” said Chris Bishop, CEO of Regent Surgical Health. Although surgeons are great clinicians and drivers of bundles, Regent serves to place the business infrastructure around these surgeons to ensure expert handling of Accounts Payable, Legal, HR, Finance, Managed Care Contracting and Board Structure to maximize the opportunity. Combining great clinical leadership with great business infrastructure, ensures improvement in the quality of outcomes, while lowering cost. "I believe that we're within 12 to 18 months of the inflection point for bundled payments that will result in high adoption rates. The time to develop bundled payment strategies is now to ensure surgeon’s drive the process," said Bishop.


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