Direct-to-employer steerage partnerships for spine care are growing rapidly, but most programs are ill-suited to participate. Here's why that is—and how the market could change moving forward.

Is your spine program ready for employer steerage?

Background

In these arrangements, large employers send their workers to high-quality spine programs that help employees avoid unneeded surgeries, which lowers employers’ costs. Walmart, for example, saves an average of about $32,000 for each of the 54% of employees who avoid spine surgery through its center of excellence (COE) program.

There's major upside for providers, too. One COE in Florida saw its out-of-state spinal fusion volume grow 41% half-over-half in its first year after joining, according to an Advisory Board analysis.

But while that growth potential is enticing, just 5% of applicants ultimately meet the requirements for consideration by the Employer Center of Excellence network, a group of large employers.

Download our primer on the current state of spine care

Below are three reasons why only programs with the integrated, multidisciplinary care model in place can truly compete for spine steerage contracts with large employers.

1. Investment in the integrated model is costly and time-consuming.

The integrated model enables providers to meet employers' demand for low surgery utilization by taking a multidisciplinary approach to patient selection. But building this model is costly and requires provider organizations to deprioritize volume growth as a program goal. Securing buy-in from surgeons and senior leaders for this change in approach often takes years to do. Programs that haven't already done so are unlikely to attract interest from employers in the near term.

2. Low-margin programs cannot sustain the integrated model's hit to revenues.

By limiting surgery utilization, the integrated model depresses spine revenues. Low-margin programs will struggle to sustain both the reduced revenues and increased costs that come with implementing this model—even when it's right for the patient.

3. The market for steerage contracts is small, allowing employers to be highly selective.

Because few large employers are currently direct contracting for spine, they can keep their business with a select group of providers that best help them achieve their goals. What's more, employers keep their partnership count low to offer significant enough volume to entice providers. Programs without national recognition in quality and appropriate utilization, therefore, are unlikely to attract employers' attention.

What does this mean for surgically focused programs?

But that could change. Employer steerage for spine care is currently limited but could expand rapidly—22% of large employers intend to use direct contracting in 2020, up from 6% in 2017. This means that while steerage is chiefly a volume growth opportunity for nationally recognized programs today, it could be a competitive necessity for all programs in the future. If winning employer steerage becomes a competitive priority, the surgery-reducing integrated model will as well.