March 10, 2014

For Cleveland Clinic, employer deals have been a 'win-win-win'

Daily Briefing

    An early pioneer of "flying-surgery care," Cleveland Clinic has completed about 200 surgeries through bundled-payment deals with several major employers, Bloomberg's Caroline Chen reports.

    Lowe's, the nation's second-largest home-improvement chain, was the first major employer to fly workers to the top-rated Cleveland Clinic for heart procedures. If an employee opts into the program, Lowe's waives its $500 deductible and covers all patient costs, including travel to and accommodations in Cleveland. Lowe's then pays the Clinic a flat "bundled" rate for all cardiac surgery services.

    Since launching in 2011, more than 60 Lowe's employees have taken part in the program, according to spokesperson Amanda Manna.

    "It's a win-win-win" for the patients, the companies, and the hospital, says Michael McMillan, Cleveland Clinic's executive director of market and network services. "The patient has no out-of-pocket responsibility, employers have a better long-term financial result and we get patients," he explains.

    The Clinic's program has expanded its program since 2011, now partnering with more than a half-dozen major employers, McMillan adds.

    Low readmissions, complications

    The hospital's low rates of complications and readmissions have proven a big draw for employees seeking to partner with hospitals, according to Susan Connolly, a partner at Mercer. "It's easy for the cost to exponentially increase if you have a readmission because when patients are readmitted, they’re pretty sick," she says, adding, "Doubling the cost of the first admission would not be a stretch."

    Cleveland Clinic spokesperson Heather Phillips notes that less than 4% of its travel surgery patients have been readmitted in the last year. Nationally, the average readmissions rate for cardiac procedures is between 9% and 13%, according to the Society of Thoracic Surgeons.

    A big draw for cost-conscious employers, struggling hospitals alike

    According to Bloomberg, bundled payment arrangements are an increasingly attractive option for U.S. employers looking to trim health care expenses as costs rise and government mandates broaden for workers under the Affordable Care Act (ACA).

    Medical centers also receive a needed boost of patients at a time when many are struggling with anemic volumes. In some cases, hospitals will drop their rates as much as 40% to guarantee a new patient population that they wouldn't otherwise have access to, says Terry White, president of BridgeHealth Medical, a Denver-based benefit manager.

    Walmart, Lowe's enter bundled pay deal with four health systems

    Providers are "very interested in extending their market share nationally," explains Mercer's Connolly. Contracting with major companies like Lowe's, which employs 161,000 people, "you know you're going to get a lot of volume because they're so big," she adds.

    Several health systems have joined the new trend, including Johns Hopkins Bayview Medical Center. "It's new volume that we wouldn't have otherwise, which means new revenue for us," says Trisha Frick, assistant director of managed-care contracting at Johns Hopkins. "It also gives us predictability in reimbursement rates" and provides an extra incentive to offer cost-efficient care, she adds (Chen, Bloomberg, 3/7).

    More reading on bundled payments

    Check out Toward Accountable Payment for the Health Care Advisory Board's latest updates on payment reform, innovation, and news on partnerships like the Clinic and Lowe's.

    And see one of our latest posts: Medicare's innovation center hints at new outpatient bundled payment pilot.

    More from today's Daily Briefing
    1. Current ArticleFor Cleveland Clinic, employer deals have been a 'win-win-win'

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