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Cleveland Clinic seeks to contract with employers to provide hips, knees, spine surgeries

By Melanie Evans
Posted: September 10, 2013 - 12:01 am ET

The Cleveland Clinic is making a push to win more business directly from the nation's largest employers by marketing package deals for new hips and knees and spine surgeries.

The Cleveland Clinic—which already contracts with retail giant Wal-Mart and home improvement chain Lowe's for package deals on some cardiac procedures—said it and three orthopedic practices that operate in Arizona, New Jersey, North Carolina, Michigan and Pennsylvania will seek to contract directly with employers to provide orthopedic and surgical care with a bundled price for all services.

The new venture, the National Orthopedic & Spine Alliance, includes the CORE Institute with operations in Arizona and Michigan; OrthoCarolina, in Charlotte, N.C.; and the Rothman Institute, which operates in New Jersey and Pennsylvania. The venture also has letters of intent with OrthoIndy and OrthoCalifornia.

The alliance has not yet signed any contracts with employers.

The new orthopedic venture will expand the health system's employer business in a market that is projected to grow as the population ages, said Michael McMillan, executive director for market and network services for the Cleveland Clinic.

The Cleveland Clinic reached its first bundled payment contract with Lowe's in 2010 and has since signed a half-dozen more, primarily for cardiac services.

Multiple locations will allow employees to seek care closer to home. The locations will share clinical data and practices in an effort to standardize care and improve quality, he said.

McMillan said the employer contracts do not currently account for much of the Cleveland Clinic's total business but that will change. “I would say it's a small slice of the pie today, but we expect it to grow over the next several years.”

More health systems are seeking to contract directly with employers with deals to bundle the price for certain services or serve as exclusive contractor for all healthcare services for a company's employees, as in a recent agreement between Intel and Presbyterian Healthcare Services in New Mexico. The direct deals have emerged as hospitals and doctors face mounting pressure to keep healthcare spending in check.

The contracts are among many efforts by public and private payers to use financial incentives to get providers to join together and take responsibility for reducing costs and improving quality. Employers have announced contracts that direct patients to no more than a few health systems which companies identify as high-quality. Patients do not pay travel costs or medical bills. Hospitals and doctors agree to one price for all related services.

Other health systems already contract directly with employers for spine and orthopedic services, including Scott & White Healthcare and Virginia Mason Medical Center. McMillan said he expects the competition for employers' direct business to grow. “Competition is good for everybody,” he said.

Follow Melanie Evans on Twitter: @MHmevans

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