Succeed in Bundled Payment Models Through Risk-Sharing

The evolution to value-based healthcare is an opportunity to not only reduce costs and improve outcomes, but to advance the relationship between hospitals and suppliers away from a zero sum game. Geoff Martha, executive vice president and president of Medtronic Restorative Therapies Group, addresses how traditional supplier relationships can evolve into true partnerships and what hospitals can do to create value, improve patient outcomes and achieve success with care episodes and bundled payment models.

GM. CJR represents the tip of the spear. Transitioning to value-based models is the future of healthcare and, at the end of the day, the experience hospitals gain from implementing CJR will set them up for future success. What you learn from cultural shifts, streamlining clinical protocols, employing more sophisticated data analytics and patient risk management can help guide your approach elsewhere. Change is hard and there will be growing pains, but shifting payments from volume toward quality is a great opportunity to leverage technologies and services that maximize efficiencies and improve clinical outcomes.

GM. Hospitals don't have the luxury of time. CJR presents real financial risk and there is an urgency to get CJR right quickly, or providers will pay the price in reconciliation penalties. Getting a handle on costs without sacrificing quality is a tall order, but it is critical given that stop-loss limits increase over time, maxing out at 20 percent, and target prices transition from hospital-specific to region-specific.¹ The flipside of this is the potential for financial gain and future success for those who act swiftly and embrace change.

Patients have multiple encounters throughout an episode of care and CJR hospitals are now responsible for what happens outside of their doors. This means that disparate stakeholders now must have shared ownership to enable optimal outcomes across an episode of care. Strategies like remote patient monitoring to help manage readmission risk and increase patient satisfaction can help improve care coordination and outcomes. However, another important driver will be evolving the relationship and accountability of key players across an episode of care – all of the players will need to have skin in the game in a meaningful way. One example is alignment around short-term and long-term physician and provider incentives and gain sharing. Physician engagement is critical and teams need to be aligned philosophically and financially.

GM. The concept of shared risk and reward should extend to suppliers. Medtronic's Orthopedic Solutions, for example, is offering risk-sharing models where we are paid based on our performance in helping our customers reduce their total episode costs and improve quality outcomes. Risk sharing is new for Medtronic, but it makes sense given today's landscape and enables us to be a true partner. This is about more than just offering implants or individual technologies and services—it's about partnering with all stakeholders throughout the entire episode of care to enable optimal patient-centered care at the best value.

GM. Leveraging past successes and tested models can expedite a hospital's ability to navigate CJR. Members of our Orthopedic Solutions Care Pathway team, which advises providers on CJR, include expert physicians and veteran hospital administrators who have had success with bundled payments in their own institutions. We've aggregated their best practices as the basis of our approach for streamling healthcare costs while maintaining or improving patient outcomes.

Footnotes

1. Comprehensive Care for Joint Replacement Model, Centers for Medicare and Medicaid Services website. https://innovation.cms.gov/initiatives/CJR. Accessed 2-3-17.

Medtronic Orthopedic Solutions brings hospitals a holistic view that spans the entire episode of care and can identify areas primed for meaningful cost reductions and offers customized solutions. We can evaluate systems and services and provide end-to-end solutions based on departmental alignment, service line infrastructure, organizational goals, and technology requirements. We understand that every hospital system is different and needs a tailored solution for their unique situation and pain points in order to maximize cost savings and improve clinical outcomes.

For more information about Medtronic Orthopedic Solutions, please visit

Medtronic.com/OrthoSolutions