How Bundled Payments Pay Off in Joint-replacement

Joe Cantlupe, for HealthLeaders Media , July 9, 2012

As more and more physicians received checks under the gainsharing plan, "all of a sudden it became intriguing," Zucker recalls. "It was an ‘Aha!' moment, and within months we had momentum. Physicians were interested in participating to achieve quality and cost savings to share in the success.

"It's challenging to move the bar very far. It's possible when physicians are aligned properly," he says. "We believed that creating this alignment also could help change the game in terms of quality; we could create much more value."

Success key No. 3: Order sets
Standardized order sets are used in healthcare systems to improve quality, such as reducing transcription or medical errors as well as improving financial performance. It could involve physician workload regarding discharges, severity of illness, or risk of mortality. The protocols can improve compliance with recommended processes of care.

The use of standardized order sets has increased dramatically, from 31% to 97% in one year, according to Zucker. By improving its structure of order sets and removing variables within physician practices, the Baptist Health System worked within a bundled payment model that led to hospital savings in orthopedic and cardiology devices and other costs of at least $8 million from June 2009 to December 2011, Zucker adds.

The hospital system has improved physician engagement, with many doctors focusing on outcomes and data, Zucker says.

In examining the order sets, they looked at various process measures, such as "what lab tests this patient needs, what drugs were needed," says Solberg.

"The standardization of our practices ensures that we all know where we are going and are focused on managing a patient," Solberg says.

Baptist Health physicians were instrumental in putting the standardized order sets together, says Zucker.

"The standardized order sets, essentially evidence-based protocols, were developed by local physicians involved in the ACE program to define the ‘best way' to treat a particular admission," Zucker says. One of the order sets involved total hip-joint replacements, he adds. "The physicians quickly transitioned to the protocol because they saw the benefits to the patients, the hospital, and themselves. The clinical protocols are another way to further ensure that everyone is heading in the same direction."

By physicians developing the clinical protocols with the hospital, "They took greater ownership of them," Zucker says.

Zucker and Solberg say that before the procedures were established, physicians were often left in the dark about the overall price of items used for implants or other orthopedic procedures because they simply concentrated on their own techniques and were not aware of products used by other physicians.

"Oftentimes, the physicians had no idea how much something cost," Zucker says. "But this transparency of our costs and data is in effect ‘putting it all out there.'"

To overcome challenges to implement a bundling program, Zucker says healthcare systems should:
- Identify opportunities for early wins to demonstrate effectiveness of partnership
- Define the vision from the outset; establish a series of short-term, achievable objectives
- Empower the physicians to own program leadership, governance, and decision-making
- Use quality improvement as the main change agent with physicians

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1 comments on "How Bundled Payments Pay Off in Joint-replacement"

K L (11/21/2015 at 5:32 PM)
Great article. There is one area that has a significant effect on the cost and profitability of bunlded payment programs - post acute care. Where and how you treat these patients after joint replacement is a major determinant on cost. Our practice has been very successful over the past year in one of the pilot bundled payment programs (BCPI). I would be happy to discuss this further with anyone interested at




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