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God forbid you’re one of the unlucky patients who end up with a sponge left in your belly or have the wrong body part amputated during surgery. But wouldn’t it be nice to know you had a warranty if something like that did happen?

A couple of interesting people I spoke with at Geisinger Health System in Danville, PA, hesitate to label their new one-price program for coronary artery bypass graft surgery as any sort of warranty—like you might get for car repairs—but a warranty is essentially what it is, and the innovative hospital system hopes the idea catches on.

“Warranty is not a term we would use internally, but that’s how the typical consumer would relate to it,” says Ron Paulus, MD, Geisinger’s chief technology and innovation officer. “We viewed it as an evidence-based medicine and quality-driven program that had a different pricing structure.”

The concept is simple but the execution will be difficult, especially for any organization looking to mimic Geisinger’s guarantee. Essentially, Geisinger bundled in doctor and hospital fees, the preadmission evaluation, the surgery itself and 90 days of follow-up care, offering one price for the entire package of services. If something goes wrong associated with the surgery, neither the patient nor his insurer pays anything further.

Geisinger says the program offers obvious cost-certainty for payers—Geisinger’s health plan was an early adoptee—and brings Geisinger a competitive advantage over competing hospitals. Further, it shows the system’s confidence that complications from surgery will be rare and provides a strong financial incentive for making sure they continue to be.

Such a program is refreshing in healthcare, a sector where practitioners of bad medicine historically have suffered less financially than they probably should while those who practice well are rewarded less than they should be. Tom Sokola, the finance vice president and chief financial officer for Geisinger Medical Center and its clinical service lines, says the program “puts the financial incentives as well as the quality incentives in place,” and insists the program is sustainable.

“We may need to change the metrics a little, but we know we’re headed down the right path here. We’ve learned so much. The financial part of this is right, so I don’t see any scenario where we would abandon the program.”

Early financial and physician and patient satisfaction indications have been so positive that Geisinger already has similar “guarantee” pilot programs under way in hip replacement and cataract surgery. Paulus says a number of other disciplines are in the queue, and “we’ll almost certainly have a half-dozen similar programs by this time next year.”

“We put some money at risk, no doubt,” Sokola says, “but there’s also a return of building business.”

—Philip Betbeze




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