supporting projects that accelerate price and quality transparency, and advocating for policy initiatives. A key PBGH member, Wal-Mart, launched a COE travel surgery program for cardiac and spine procedures, and suggested that this type of program could have a stronger impact in the market if multiple employers joined together. Since then, PBGH has learned that employers want a travel surgery program that offers high-quality surgical care at affordable rates, not simply the “best deal.” Employers that sign on with PBGH’s Employers Centers of Excellence Network can expect to receive a complete return on investment within two years — and significant savings thereafter. In addition to the competitive bundled rates, higher quality care leads to greater savings. This prompts providers to collaborate to ensure the best outcomes because any additional cost incurred beyond the fixed price comes out of the provider’s pockets. As a result, Geisinger Health System, for example, has seen a 21 percent reduction in complications, a 25 percent reduction in surgical infections and a 44 percent drop in readmissions.1
Getting Started In today’s tumultuous health care landscape, cost of care has become as important as quality of care when it comes to choosing a hospital or physician for a specific treatment or procedure. As patients assume greater proportion of costs through higher co-pays, deductibles and other plan cost-sharing features, they are becoming more comfortable with the idea of leaving home to access better care that costs less out-of-pocket — rather than seeking care locally. Having access to geographically specific health care cost information is essential for empowering patients to make moreinformed decisions about whether to travel for care and how to plan for it financially. In fact, every stakeholder benefits from price transparency and bundled pricing.
Overcoming Price Variation Enormous variation in health care prices persists across the country. One hospital might bill $40,000 to remove a gallbladder using minimally invasive surgery, while another hospital might charge $91,000, according to the New York Times.2 Prices can also vary within each state. The median cost for a common inpatient heart procedure in southeastern Wisconsin, for example, ranges from $178,647 at Waukesha Memorial Hospital to $105,119 at Wheaton Franciscan Healthcare — All Saints Hospital in Racine, as the Milwaukee Business Journal reported.3 By only signing contracts with providers priced in the low range,
By only signing contracts with providers priced in the low range, but that also demonstrate good outcomes, employers can lower the cost of providing health care without compromising quality. but that also demonstrate good outcomes, employers can lower the cost of providing health care without compromising quality. COEs also offer bundled pricing. This is the reimbursement of health care providers based on expected costs for clinically defined episodes of care. Providers are paid a single fee for a set of evidenced-based services related to a diagnosis, with payments typically linked to outcomes, as well as other quality measures. As plan members take on a greater share of their own health care costs, they are beginning to distinguish between low prices and high quality. Likewise, employers are playing a more proactive role by contracting directly with health care providers and COEs in order to find the best value for their employees, and opting for bundled, fixed-price procedures. This has created a new dynamic that benefits companies of every size, plan members and the entire U.S. health care system. Laura Carabello has been an entrepreneur and a strategy consultant in both domestic and international businesses related to health care and technology since 1985. She is the publisher/managing editor of Medical Travel Today, the authoritative, online business-to-business international newsletter of the medical tourism industry, as well as US Domestic Medical Travel. In 2011, Carabello published Medical Travel Today: Opinions and Perspectives on an Industry in the Making. 1 Champion, Wes; How Bundled Pricing Just Might Save Healthcare From Itself; Healthcare Blog; Oct. 26, 2012; http://thehealthcareblog.com/blog/2012/10/26/ how-bundled-payments-just-might-save-health-care-from-itself/; accessed January 9, 2015. 2 Meier, Barry et al; Hospital Billing Varies Wildly, Government Data Shows; New York Times; May 8, 2013; http://www.nytimes.com/2013/05/08/business/ hospital-billing-varies-wildly-us-data-shows.html?_r=0; accessed August 31, 2015. 3 Kirchen, Rich; Latest hospital pricing data show wide variance in costs of procedures; Business Journal; Aug. 21, 2014; http://www.bizjournals.com/ milwaukee/news/2014/08/21/latest-hospital-pricing-data-show-wide-variance-in. html?page=all;
HealthCare Consumerism Solutions™ I www.TheIHCC.com I Annual Outlook 2016
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