Orthopedic Surgeons Must Embrace Bundled Payment Models

As if there weren’t enough indicators of the continued shift from volume to value, the recent meeting of the American Association of Hip and Knee Surgeons (AAHKS) in Dallas drove home the importance of positioning your orthopedic program on the right side of the value equation. Just as we have seen in administrator-focused conferences, this surgeon-based meeting moved its focus away from expensive new technologies and gadgets and toward payment evolution and demonstration of value.

Although there was the usual mix of vendors peddling their products, there was also a palpable shift of focus from technologies like robotics, navigation and custom cutting jigs, to innovations that improve communication and care continuum linkages such as EHR solutions, outcomes-tracking software, and picture archiving and communication systems (PACS). In fact, there were more rumblings than ever around utilization of technologies that contribute to higher costs without a demonstrable improvement in outcomes.

Surgeons Must Prepare for Evolving Payment Models
Although orthopedic professional organizations have traditionally sent the message that orthopedic surgeons need not assume risk that some of their physician colleagues assumed in “per member per month” capitated contracts, these organizations now are encouraging surgeons to prepare for the evolving payment landscape. The take-home message: get patients better fast, share the risk burden and track outcomes. And that doesn’t just include the acute care episode. Long-term functional outcomes and revision rates are being closely monitored. Bundled payment models continue to gain steam, and the writing is on the wall: if you aren’t participating in bundles now, you should be assessing opportunities in your market and preparing for risk assumption as the momentum around these models continues to build.

This preparation will require thorough program and patient assessment on the front end to diminish risk of complications, define bundle “ownership,” and appropriately tier patient participation. This translates to four key imperatives for orthopedic surgeons:

  1. Surgeons will need to work increasingly with health care systems to develop the ability to accept risk. This requires robust data systems that can measure longitudinal clinical and financial outcomes.
  2. Surgeons will increasingly look to hospitals and health systems to collaboratively develop or leverage these data systems. Moreover, collaboration with other entities such as post-acute providers to track episodic outcomes and cost is a huge success factor in a bundled payment model. This can mean collaborating with insurers to get metrics such as readmission rates and total cost of care across the continuum.
  3. It’s not the model that makes a bundled payment initiative successful, it’s the structure. The right balance of surgeon leadership, operational program leaders and payer contracting professionals establishing pathways and tracking clinical and financial episodic results is imperative.
  4. Not every patient is a candidate for bundled payment or for surgical intervention in general. We are seeing more and more insurers deny coverage for procedures such as joint replacement in patients with a high body mass index, for example.

Joint Preservation Technology Is Evolving
Ok, Sg2: are you saying there was really nothing exciting about new or evolving procedures at this surgeon-based conference? Well, that would certainly be a stretch, wouldn’t it? Of course there are advances in procedural technologies, most notably those impacting patients with hip dysfunction. Between the American Academy of Orthopaedic Surgeons (AAOS) meeting and the AAHKS meeting, hip arthroscopy, hip dysplasia and femoroacetabular impingement (FAI) procedures continue to generate substantial interest, as evidenced by the number of papers and symposia dedicated to the treatment of “pre–hip arthritis” patients under the age of 40. New surgeons are increasingly learning these techniques through fellowships, and as more surgeons become comfortable performing these procedures, we anticipate continued growth in hip arthroscopies and acetabular osteotomies—a solid call-to-action for more robust joint preservation programs.

Adding to the demand for surgical hip procedures are the increasing acceptance and appropriateness of total hip replacement surgery in younger patients in the outpatient setting. Sg2’s outpatient hip surgery forecast anticipates favorable positioning for hospitals and health systems with comprehensive hip programs.

Key Steps Can Help Surgeons Gain Value, Loyalty
As orthopedic care providers continue to be evaluated through the value lens, consider these tips to earn the loyalty of consumers, payers and providers:

  • Invest in those services that allow for earlier intervention and an alternative to complex surgical procedures.
  • Simplify the financials for insurers by sharing risk and considering episodic payment bundles.
  • Prioritize resources to support long-term outcomes tracking and patient engagement


Andrew Star, MD, Sg2 orthopedics clinical advisor, contributed to this post.


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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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