EP434: 4 Surprises About Bundled Payments, With Benjamin Schwartz, MD, MBA

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Episode 434, "Five Surprises About Bundled Payments".

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Today, I speak with Dr.

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Ben Schwartz.

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American Healthcare Entrepreneurs and Executives You Want to Know., Talking.

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Relentlessly Seeking Value.

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I've been in a couple of meetings lately.

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In one case, a healthcare company came up with a strategy and deployed it,

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and the strategy didn't go as planned.

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The other one, it did go as planned.

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It worked great.

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Of course, I'm coming in on the back ends like a Monday morning quarterback here.

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But the plan that failed, I have to say I wasn't surprised.

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Had they asked me ahead of time, I would have told them to save their money because

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the plan was never going to work, even though the strategy looked like kind

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of a straight line from here to there.

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Nor was I shocked by the success of the other plan, even though this one,

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the triumphed, had what looked like five extra steps and was slightly

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counterintuitive if you looked at it cold without understanding the way the

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healthcare industry actually works.

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Here's my point.

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It might feel like the healthcare industry is chaos monkey central and impossible

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to predict actions and reactions.

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And for sure, there's always unknowns and intersecting variables, but

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it's not a complete black box.

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The trick is, as you know, and I know because you're listening to

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this podcast, you got to understand what other stakeholders are up to.

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You got to get a bead on what they're doing and what their incentives are.

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Because then you can better predict actions and potentially reactions.

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So let me state the obvious.

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That's why listeners tuned into the show, as I just said, and it's what

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we aim to shine a light on here at Relentless Health Value, the

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pushes and the pulls and the forces.

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What's going on outside of the organizations or the silos

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that we work within day to day?

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Because if you're looking to sell to, partner with, not be obstructed by,

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insert some stakeholder here, then it's very vital to be keyed in on what they're

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doing or what their customers are doing or what their customers vendors are doing.

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This show should feel like it gives you a measure of control or

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at least that's my hope or method.

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To find the measure of control.

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And I hope you succeed.

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That's why I continue to put out these shows.

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The RHV tribe members want the same thing I want to fix the healthcare

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industry for patients and for members.

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So thanks for being here and for making actionable the insights

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that you might find here.

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I have been looking so forward to doing a show with Dr.

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Ben Schwartz, orthopedic surgeon and prolific writer of deeply thoughtful

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and insightful posts on LinkedIn.

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Today, we are talking about bundled payments.

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And today's your lucky day if you think you know a lot about bundles,

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because most people who listen to the show at least know enough to be

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dangerous, so that's our starting point.

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Which is why I asked Dr.

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Schwartz to talk to me about what most people find surprising about

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bundles and bundled payments.

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There are four surprises that we go through in the show today, and listen

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to the show or read the transcript to find out exactly what they are.

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So no spoiler alert, alert.

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But relative to these surprises, we get into the four types of bundles

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that may or may not be available.

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And those four types of bundles are number one, CMS bundles, such

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as the BPCI and the CJR bundles.

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And we talk about the current state of said BPCI bundles, which are being

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sunsetted, probably, because so many efficient clinical teams are being

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penalized for getting too efficient.

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They become victims of their own success, the way the program is currently designed

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wherein the goalposts just keep shifting.

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The second type of bundle that we talk about are commercial bundles, i.

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e.

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a bundle that is offered by a commercial carrier, such as a BUCA, i.

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e.

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Blue Cross Blue Shield, United Healthcare, Cigna, Aetna, Anthem carrier.

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Number three kind of bundle is a direct bundle.

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This is a bundle that is paid for directly by a plan sponsor,

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such as a self insured employer.

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And then number four type of bundle we talk about is a condition

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or diagnosis specific bundle.

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These types of bundles do not spiral around a surgical

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intervention at their core, which most of the current bundles do.

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So, this last type, this fourth bundle type, may describe CMS's recently

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announced Making Care Primary initiative, but we'll have to see about that.

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Speaking about the number three kind of bundle, the Employer Direct bundles,

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especially for musculoskeletal, MSK.

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Let me read a post by Moby Parsons, MD, that I thought captured the

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entrepreneurial spirit of some of these orthopedic surgeons who are seeking

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employers to direct contract with and cut out the middleman , et cetera, which, by

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the way, is the main topic of an entire show upcoming with Elizabeth Mitchell from

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the Purchasers Business Group on Health.

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But Dr.

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Parsons wrote, When our bundle business has sufficient growth to ensure the

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absolute sustainability of our practice against declining in a fee for service

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system, I'm going to get this tattoo.

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"Don't tell my wife.

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And the tattoo is free yourself."

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My guest today, aforementioned, is Dr.

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Ben Schwartz.

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He's an orthopedic surgeon in the Boston area, still in

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full time clinical practice.

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He's grown very interested in healthcare innovation, healthcare technology,

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and does some advising and investing.

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Dr.

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Schwartz also writes a great Substack called "Dem Dry Bones".

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All the links to everything I just said in the show notes.

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After you listen to the show, please go back and listen to the one with Dr.

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Steve Schutzer talking about how to create a center of excellence and also

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the one with Rob Andrews about how and why, if you are a plan sponsor, you might

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want to consider direct contracting with quantifiably amazing provider groups.

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Also, if you are an ortho or involved in MSK care, I might suggest following

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Karen Simonton on LinkedIn as well as Moby Parsons, MD, and for sure,

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of course, my guest today, Dr.

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Ben Schwartz.

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My name is Stacey Richter.

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This podcast is sponsored by Aventria Health Group.

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Dr.

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Ben Schwartz, welcome to Relentless Health Value.

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Thank you.

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Thanks for having me.

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This is quite an honor.

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Let me ask you one question before we also get into the

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heart of our conversation today.

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Where are we in the bundle time space continuum?

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Sure.

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So the main bundles that people know about are through CMS, through the

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government, and that's the Bundled Payment for Care Improvement Program, or BPCI.

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It's a mouthful.

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And that started several years ago.

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Now it's been through an iteration to the advanced model.

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But the general idea is you get paid a lump sum for that hip or

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knee replacement, and any care that happens in the 90 days after the

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procedure comes out of the bundle.

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And so there's been some good lessons learned, there's

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been some care improvement.

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The problem is that the target price in the bundle tends to shift

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lower, you become a victim of your own success, and then it becomes

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difficult to see upside reward.

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You experience downside risk and then you have to drop out of the

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bundle, and that's where most surgeons in the BPCI program end up.

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And the thinking is that's going to be sunset by CMS probably after

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2025 and replaced by something else.

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We don't know what yet.

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Probably some form of specialist and primary care working together

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and being incentivized together.

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There are commercial bundles, and that's through obviously a commercial

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insurer where you approach them.

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Similar sort of concept of it's a lump sum payment attached

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usually to a surgical episode.

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Those are harder to get, and we can talk about why that might be later on.

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There is this third arm that's arising, I think it's going to become more

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commonplace, and that is some form of bundled agreement with a self insured

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employer that's looking for high value, cost effective care, and so

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you can negotiate with them directly.

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That's a center of excellence model, or there's care navigators.

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So there's more of this direct bundled program.

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The final thought is eventually we expect bundles to shift away from

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surgical episodes of care and maybe more towards condition specific,

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whether that's attached to back pain or knee arthritis or hip arthritis.

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To really capture more of the care process outside of the surgical episode.

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Okay, so you listed four types of bundles there.

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One is the BPCI bundle, which is a CMS thing.

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Paid a lump sum after a surgical episode.

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As you said, people become a victim of their own success because

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you get paid for efficiency.

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So like how efficient you are becomes the benchmark and then you have to be more

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efficient than you're, Efficient self.

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You have to get down with your more efficient self at a certain point.

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You can't become more efficient.

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So then, yeah, you start losing money.

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And as you mentioned, Sunset 2025, then you also have your commercial bundles.

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You also mentioned number three, there's some self insured employers are

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contracting for bundles and a lot of times this happens in the context of a

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Center of Excellence or a COE program.

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And then lastly, there's a lot of talk I've seen around can we

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do condition specific bundles or diagnostic based bundles.

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And you mentioned back pain and then the clinical group gets paid a certain amount,

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some capitated number to take care of that patient for some duration of time.

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I think the latter one, obviously, you know, a surgical episode, a

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surgical bundle just says I did a good job of doing that surgery.

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The patient didn't have a complication or readmission at 90 days.

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It doesn't really say a whole lot about, well, did I manage that

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appropriately up to that surgery, was that surgery indicated?

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So, I think the hope for these condition specific bundles is it's going to

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incentivize that whole episode of care attached to that diagnosis, and not

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just the surgery, but non surgical management if that's appropriate.

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That surgical episode might be so called nested into that bigger

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bundle, but it's not going to be the only focus of the bundle itself.

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Well, what you're bringing up, it's been discussed as a potential

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perverse incentive with these bundles.

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A surgeon also gets paid a bundle if the surgeon does an inappropriate surgery.

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So one of the things that is a promise of value based care is care

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is appropriate and we don't have an incentive to do too much care.

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Bundles don't do anything to address that.

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Correct.

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The hope of these condition specific bundles is that they kind

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of incentivize more appropriate care throughout the care journey.

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Again, whether that's non surgical treatment, physical therapy,

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an injection, medications, not just around a surgical episode.

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Bundles do nothing really to disincentivize inappropriate care.

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What else might be an issue?

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They also can potentially lead to cherry picking and lemon dropping.

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So, you operate on the healthier patients that you know are more likely to do well

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or less likely to have a complication.

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So, they're less likely to be a downside risk in the bundle.

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And then you don't operate on the more complicated patient

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because the bundles don't do a great job of risk stratification.

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So that higher risk patient that maybe is more likely to have a complication or more

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likely to use post acute services, maybe you're less likely to offer surgery too.

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So it definitely sounds like the bundles do have disadvantages, but if we're

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thinking about the promise of a bundle as maybe a first step into value based care,

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we talked about a bunch of negatives.

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Let's talk about some positives now.

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What are the, what's the good news?

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Yeah, the good news is we have learned a lot of lessons from the bundles.

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We learned patients tend to do better if we treat them more holistically.

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So, if we take an active role in optimizing patients for surgery, making

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sure their diabetes is well controlled, making sure any anxiety or depression

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is taken care of, because we know that affects outcomes from surgery.

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We've learned that one of the biggest cost drivers is post acute care, so if

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the patient is discharged somewhere other than home after the surgery, that's very

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expensive and guess what, they also have a higher readmission rate, they also tend

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to have a higher complication rate if they end up in a nursing facility or rehab.

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So we've learned that it's safe for patients to go home, it's cost

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effective for them to go home, it's better for them to go home.

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So there are lessons we've learned about how to take better care of patients, how

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as orthopedic surgeons to see and treat the patients more holistically, how to

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optimize their health for surgery, so they have better outcomes, and that's

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an enduring lesson from the bundles.

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In an enduring way, we have orthopedic surgeons who are

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thinking about a whole person here.

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As you just said, if their diabetes is uncontrolled.

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So just the outcome is not going to be as good.

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And now everybody is on the same team, making sure that the patient

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is prepared for the surgery and then gets the right aftercare.

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One of the most interesting things we've learned is that patients

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who stop smoking specifically to get their hip or knee replaced.

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A lot of them don't go back to smoking after their procedures, and

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so these are the ripple sustainable effects that we've learned.

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What I would like to do is to go through a few things that people

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might find surprising about bundles, things that they may not realize or

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may be a little bit counterintuitive.

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So if we're thinking about what is surprising about bundles, you

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mention it and people are like, what?

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One of the things that comes as a surprise to a lot of people in that 90 day window,

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and this is for the CMS BPCI bundles.

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Anything that happens to that patient medically that Medicare has to pay

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for in that 90 day window after surgery comes out of the bundle.

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Two of my examples of quote unquote losers, meaning that we experienced

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downside risk, one patient within 90 days of their procedure was diagnosed

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with a head and neck cancer that obviously needed to be treated.

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That came out of the bundle.

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So I was on the hook for that even though it had nothing to do with their surgery

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they did well from their knee replacement.

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I had another patient that had inflammatory arthritis, they were on

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a biological infusion like Humira or Enbrel, and we typically skip a dose

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before and after surgery for a month to reduce the risk of infection, then the

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patient goes back on that medication month two after their surgery, so

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that's two doses in that 90 day window.

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That infusion at $7000 a pop, and that comes out of my pocket.

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$14 out of the bundle because it was paid for by

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Medicare in that 90 day window.

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Is this how to get the orthopedic surgeon to pay for oncology

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care or infusions for 400, Alex?

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Yeah, unfortunately, it seems a bit unfair to put people on the hook for

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things that are unrelated to the surgery.

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So surprising thing number one is these bundles are all in for all

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downside risk in the next 90 days.

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Somebody gets hit by a car or something like that.

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But if there's medical care, the orthopedic surgeon is paying for it,

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even if it's quite clear that it's not, that had nothing to do with the

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surgery is what I'm understanding.

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Correct.

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For the CMS bundles, that's correct.

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All right.

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So that is surprising.

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What's the surprising thing too?

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I think that maybe the second surprising thing, maybe a cynical take, but as

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much as we talk about value based care, commercial payers, you could argue that

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maybe incentivized for pursuing bundles or agreeing to do bundles with orthopedic

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surgeons because of medical loss ratio and whether or not that's really in

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line with their typical business model.

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But commercial bundles, again, as much as we talk about value based care,

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can be difficult, not impossible.

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A lot more difficult to get involved with if you're an orthopedic practice.

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Surprising thing number two, despite a lot of talk, commercial payers are really

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not overly interested in doing bundles.

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There are pockets where people have been successful, but it takes a long time.

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It's hard to get in front of the right people.

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It's hard to get engagement.

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I think people might think, hey, they'd be willing to do anything that's value based.

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But it is a challenge to get into these commercial bundles.

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It takes a lot of work to get them to come to the table.

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Well, I will say that take has been corroborated from the employer side.

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I did have a conversation with the leader of a very well respected

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employer coalition and the employer coalition got a bunch of employers

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together in a particular region.

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So the employers worked out a bundle arrangement that they all agreed to, then

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they went to local providers in that same region and brought the providers along.

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So now you have the employers and the providers themselves who were

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like, okay, we have agreed on a bundle that we want to do together.

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The two of them, those two stakeholders, then went to the TPAs that were

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serving these self insured employers.

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And they said, hey, we need you to administer this bundle that

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we worked out with our providers.

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And those TPAs said, nah, not going to do it.

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Can't do it.

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Won't do it.

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The end.

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That was the end of the story.

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I think what we're going to see as a result of that is the self insured

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employer is then going to figure out a way to do it themselves.

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If it's not the commercial payers, we are going to see other people

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step into that void to help administer that, to help make those

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connections, to help collect that data.

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To help the self insured employer make sure they're pointing their

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employees in the right direction of high quality, high value providers.

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I think we're going to see that become more commonplace because

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I think the desire is there on the part of the surgeons.

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I think the desire is there on the part of the self insured employers.

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I think it's beneficial for those two parties, and if the commercial

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insurer doesn't want to play ball, I think that you'll find those

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other two parties figure out how to work together to make it happen.

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Yeah, I mean, it does surprise me a little bit, honestly, that the

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fully insured plans aren't scoping around for bundles from you.

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Just because from everything that you've said with the improved surgical

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outcomes, as well as the, you're on the hook for the next 90 days.

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It feels like something a fully insured payer would be interested in.

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A part of it, again, is the cynical take is that you don't want to get

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too many different arrangements with too many different providers.

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So as it becomes sort of choppy and fragmented and how do you approach

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practices in order to do that?

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And does it look the same from one practice to the next?

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What kind of data do you want or need?

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To see, to make that worthwhile, is it a big enough provider that it makes

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sense to go through that process?

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The point that you're making is you've got this big national player

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who's offering fully insured plans.

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Ah, maybe they spy some upside relative to this whole bundle thing,

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but from a, you know, I'm going to use the efficiency in air quotes.

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It's very inefficient.

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You have to do all these contracts.

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It's really hard to administer.

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So the view ain't worth the climb.

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It sounds like, or they just can't even figure out how to do it from

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an administration standpoint.

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Yeah, I think that certainly is a big part of it, right?

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I mean, that's the one thing about fee for service as much as it has downsides.

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It is clean, it's very transactional, it's a little bit easier to wrap your

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head around than, you know, a bundle where there's different moving pieces.

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On the other hand, as Rob Andrews, said in episode 415, this is their day jobs, these

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payers slash third party administrators.

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This is what we're paying these entities to do to figure out how to get the

00:19:05
best health care for plan members.

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And we all know full on FFS is bad scene from a actually

00:19:14
producing health standpoint.

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So yeah, I'm going to chalk myself up as surprised that not being able to pull off

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something as kind of basic as a bundle.

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I mean, there's some value based care arrangements that are

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really complicated, but a bundle?

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So not being able to pull off a bundle efficiently is a conversation

00:19:32
that we're actually having in 2024.

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Alright, so we've got two surprises about bundles that we've already talked about.

00:19:38
One is the whole 90 day thing, the orthopedic surgeon

00:19:40
has to pay for everything.

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Secondly, commercial payers are a little bit behind the curve, maybe not fans.

00:19:48
Some combination of both.

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Is there a third surprise?

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Yeah, I think looking into the future, part of what we're going

00:19:55
to see is the evolution of bundles or specialty value based care.

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Medicare kind of tipped its hand announcing the Making

00:20:02
Care Primary program last year.

00:20:05
There's going to be a move to number one, try to coordinate specialty and primary

00:20:10
care a bit better and incentivize that, but it's curious to me, I think some

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of the expectation, maybe even some of the concern on the part of orthopedic

00:20:17
surgeons is that they're incentivizing primary care doctors maybe to do more

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of the specialty care delivery or take on more of specialty type stuff

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and will incentivize them to do that.

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The question is, what does that look like?

00:20:32
For Are primary care doctors going to feel comfortable doing that?

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Is there going to be maybe a little bit of a battle between primary care doctors

00:20:40
and specialists if the bundles become more general or more open to everybody?

00:20:44
If you control a condition specific bundle and the surgical episode is

00:20:48
nested within that, that's going to give more power to direct the bundle.

00:20:52
Okay, surprising thing here is that in this new condition specific or diagnosis

00:21:01
specific bundle model, you could actually have primary care taking ownership

00:21:05
for bundles and then bossing around the orthos who might have a surgery

00:21:10
nested in the middle of said bundle.

00:21:13
So it's no longer the MSK specialists who are the leader of the bundle or

00:21:19
the owner of the bundle, you're going to have somebody else, potentially

00:21:22
primary care, who's the owner.

00:21:24
And that's different . I can certainly see if we're trying to figure out areas

00:21:30
where there are opportunities, To save money, considering most of the money

00:21:35
is being spent in the specialty arena.

00:21:38
I mean, one of the reasons is because primary care is just so woefully

00:21:41
underfunded trying to figure out how to do more coordination could help

00:21:47
reduce the spend having primary care do more, which isn't like a new idea.

00:21:53
You want to do what's right for the patient.

00:21:54
If it's, hey, let's manage this in a primary care setting until it becomes time

00:21:58
for the patient to see the specialist.

00:22:00
I think that's a good thing, certainly more care coordination between primary

00:22:04
care doctors and specialists is a good thing, and figuring out a way to

00:22:08
incentivize both sides of that equation to work together is also a good thing.

00:22:12
I think the concern comes in of just making sure that the patient

00:22:16
is getting the appropriate care.

00:22:18
I think that will create potentially an opportunity for somebody, some

00:22:23
entity, to bridge that gap to make sure the right decision is being made.

00:22:27
The primary care doctor feels comfortable, they are making the right decision.

00:22:31
And then the specialist feels comfortable that the patient is coming to them at

00:22:35
the appropriate time and not too late.

00:22:36
So I think there's going to be an opportunity to bridge that gap between the

00:22:40
specialists and the primary care doctors.

00:22:42
I think we will see some companies start to fill that gap.

00:22:45
So you're talking about some kind of MSO type entity.

00:22:50
Yeah, either an MSO or perhaps some type of a care navigator, a care coordinator

00:22:56
who has some experience and can help make that decision to say, you know,

00:23:00
yes, it's time for the specialist and we can point you to high value

00:23:03
specialists or you know what, whatever.

00:23:06
You know, maybe you haven't tried this, maybe it's not time for imaging yet.

00:23:09
And so you can continue to manage this in the primary care setting will help

00:23:13
you to do that so that the patient is still getting good care, but it's

00:23:16
not quite time to see the specialist.

00:23:19
I'm of a couple of minds as I'm listening to you, you talk there.

00:23:23
On the one hand, I'm like, there are entities right now

00:23:27
that are kind of in that space.

00:23:29
For example, you've got the virtual console gang.

00:23:32
So a primary care doctor can get a hold of a specialist and ask that

00:23:35
specialist questions as opposed to doing a full on referral.

00:23:38
And as you were talking about navigators, obviously there's a plethora of them.

00:23:42
There are entities that are already in the mix there.

00:23:45
On the other hand, I would hate to see specialists in primary

00:23:49
care disintermediated from working together when there's just such an

00:23:53
opportunity just to work together.

00:23:55
First of all, like we're just talking about knee pain.

00:23:58
There's some shocking percentage of patients who go to their primary

00:24:01
care doctor for musculoskeletal pain.

00:24:04
I was reading a study just how little musculoskeletal training

00:24:08
primary care doctors tend to get.

00:24:10
In fact, if you read Dreamland or any of those books about the opioid crisis, one

00:24:14
of the reasons for the opioid crisis, according to some, is that primary care

00:24:20
doctors felt really pretty powerless.

00:24:23
in the face of patient pain.

00:24:24
So when, you know, opioids showed up, they were like, sure, and started

00:24:28
prescribing them because they didn't know anything else to do amongst

00:24:33
a whole bunch of other factors.

00:24:34
I totally agree with you.

00:24:36
I think the disintermediation point is very valid and the ideal situation

00:24:40
is let's bring specialists and primary care doctors together, let's not

00:24:45
pit them against one another, right?

00:24:47
Can we design some type of bundled payment program, capitation program,

00:24:53
where we really get primary care doctors and specialists working together?

00:24:57
You're right that at least in my medical school, unless you really sought out

00:25:01
musculoskeletal education, we got like two lectures on musculoskeletal

00:25:07
topics in medical school and the training isn't necessarily there

00:25:11
later on as well in residency.

00:25:13
So you don't want to put primary care doctors in a situation where they're

00:25:17
sort of incentivized not to refer to the specialist, but at the same time

00:25:21
they want to feel like they're doing the right thing for the patient.

00:25:24
And that can lead to, you know, over treatment, under treatment, over

00:25:28
imaging, under imaging, wrong imaging.

00:25:31
So, I think the ideal is to develop a program that coordinates those

00:25:36
two things and has them incentivized to do the right thing together.

00:25:41
I think one of the concerns about these navigators or these entities that exist

00:25:45
that you've mentioned is unfortunately, a lot of them, their value proposition

00:25:49
seems to be, hey, let's keep that patient away from the specialist because that's

00:25:53
where the cost really lies, and that's okay if it's appropriate, but making sure

00:25:58
that the patient does see the specialist when it is necessary is number one.

00:26:02
And number two, making sure that the primary care side of the equation has

00:26:06
resources that they feel comfortable at, hey, I'm doing the right thing for

00:26:10
the patient, or I have a resource I can go to if I'm not sure that maybe isn't

00:26:15
referring completely to the specialist, but is making sure that I'm on the right

00:26:20
track, that I'm not missing something, that I'm not delaying care, that I'm not

00:26:23
doing the wrong things for that patient.

00:26:26
And that's a lovely promise, right?

00:26:28
And I mean that full throatedly, that one of the things we've been

00:26:33
striving for is to get primary care and specialists working together.

00:26:38
Obviously, the whole lack of data could be a factor here.

00:26:41
There was recently a hospitology newsletter about this , just that

00:26:44
primary care doesn't have the data a lot of times to know who the specialists

00:26:49
are that are performing the best.

00:26:52
But the promise is very interesting and it seems like it

00:26:55
could be a way forward for sure.

00:26:58
All right.

00:26:58
So that was our third surprising thing about bundles, Dr.

00:27:01
Ben Schwartz.

00:27:01
Is there a fourth?

00:27:03
Yeah.

00:27:03
Tangentially related to the bundles is the concept of centers of excellence.

00:27:07
Those have become also very commonplace.

00:27:10
A lot of promise.

00:27:11
There was a pretty landmark HBR article written several years ago about

00:27:16
Walmart's experience in the COE program.

00:27:19
I think if you dig into that and you parse it a little bit,

00:27:22
the Centers of Excellence.

00:27:23
Don't necessarily save money sort of on the cost of the procedure.

00:27:28
They can be as expensive if not more expensive in some

00:27:31
cases for the procedure itself.

00:27:33
I think the value is driven there by surgical avoidance.

00:27:36
So you get sent to the Center of Excellence and the physician at the

00:27:39
center of excellence says no, I don't agree with the community surgeon.

00:27:42
You don't need a $100 back fusion.

00:27:45
And then that's your employer obviously saves money and in an avoided procedure.

00:27:49
And there is potentially some value to that, but unfortunately, there's

00:27:52
a lot of gray areas and one person's opinion may be different than

00:27:56
somebody else's opinion and how do you decide whose opinion is correct.

00:27:59
So I think the COE model is interesting, but it's really kind of more that

00:28:05
decision for or against surgery.

00:28:06
It's not necessarily that their outcomes are any better, it's not

00:28:09
necessarily the cost is any less.

00:28:11
It's more that you're getting maybe a differing opinion that says,

00:28:15
hey, I don't think this procedure has indicated that this person

00:28:18
in the community is describing.

00:28:20
And then that person in the community that maybe has had a relationship with

00:28:22
that patient for years has to then deal with that patient who was sent to the

00:28:27
Center of Excellence by their employer.

00:28:29
The employer says, look, the Center of Excellence said you

00:28:32
don't need that procedure.

00:28:32
I think people assume the COE is cost controlled for the

00:28:37
procedure when oftentimes it's not any cheaper than having the

00:28:40
procedure done in the community.

00:28:42
Probably less care variation at the center of excellence, but I think most

00:28:45
communities have good high quality, high value surgeons if you're willing

00:28:49
to take the effort to find them.

00:28:51
Okay, there's a couple of things I find really interesting

00:28:54
about what you just said.

00:28:55
And the first one is, and just never really thought about it before,

00:28:58
honestly, but just pointing this out.

00:29:00
We've had Peter Hayes on the show talking about just the high prices

00:29:04
of hospital services, right?

00:29:06
Hospital prices are very high.

00:29:08
I just never really thought about that.

00:29:10
If we're talking about a center of excellence, which tends to be an academic

00:29:13
medical center, which tends to be a hospital, you know, hospital system.

00:29:16
So the prices are very high.

00:29:18
The reason why those programs are cost effective or reduce costs isn't because

00:29:25
the cost of the procedure is any less.

00:29:28
It's because there are less surgeries.

00:29:31
In a lot of cases, I think the employer and the Center of Excellence do tend to

00:29:36
negotiate through their own bundle price.

00:29:38
But even then, It's not necessarily less expensive than if you went to,

00:29:42
you know, a community facility to have your surgery or let's say a surgery

00:29:46
center, which is going to be even less expensive than having it done at the COE.

00:29:51
You look at the SAGE Transparency Project or you look at any of these things, it's

00:29:54
very clear that commercial rates are quite high and the center of excellence model.

00:29:59
You're still going to those same exact entities that are charging a lot of money.

00:30:03
I mean, there's some upsides here.

00:30:04
One of them is a lot of the center of excellence programs do require

00:30:09
very meticulous data tracking.

00:30:12
Such a small percentage of provider organizations and or clinics measure

00:30:16
outcomes of any kind clinical or PROMS, Patient Reported Outcome Measures.

00:30:23
I think that's the main question here.

00:30:24
I mean, how do clinicians even know if what they're doing

00:30:27
is amazing or not amazing Dr.

00:30:29
Steve.

00:30:30
Schutzer talked a lot about this in Encore episode 294, if somebody really

00:30:34
wants to dig in, but if I'm an employer using a center of excellence model, the

00:30:38
requirements to track a lot of different data elements could really be helpful

00:30:43
and potentially I'm not sure the worth it and valuable in and of themselves.

00:30:47
So there's definitely some upsides here.

00:30:49
However, the cost of the procedures themselves are still, as you

00:30:52
just said, on the high side.

00:30:54
But then the other issue to kind of keep in mind is, it certainly

00:30:57
is a second opinion, right?

00:30:59
And as anyone would tell you, whenever, before anybody gets any surgery, you

00:31:04
should definitely go get a second opinion.

00:31:05
But because that second opinion and the surgery may be happening outside

00:31:09
of the patient's local community and outside of that patients local ability

00:31:14
to go get physical therapy or go get, right, like they're going to have to

00:31:18
get aftercare within the community.

00:31:20
There may be a disruption of care continuity, and if they need care then in

00:31:26
the community, that is certainly something that anybody with the Center of Excellence

00:31:29
network should be keeping in mind.

00:31:32
There's a lot of things there that you mentioned.

00:31:34
Number one is, for sure, I mean, it's not fair to throw shade at COEs if

00:31:38
you don't come with your own data.

00:31:39
So, if you want to keep those patients locally, and you say, we do just as good

00:31:43
a job, and we can do it maybe more cost effectively, you have to bring the data.

00:31:47
That's only fair, and you have to prove it.

00:31:49
So, I think that's point number one.

00:31:51
Number two is, yes.

00:31:52
In my mind, the best thing for the patient is to whenever possible keep them in

00:31:57
the community as opposed to something that's, that can be very transactional,

00:32:01
they're meeting that person for the first time at the COE, maybe they're

00:32:04
having their surgery, and they're going back to the community, and now it's

00:32:07
up to the community if that patient shows up in the ER with a complication.

00:32:10
The COE maybe tries to take care of the complications as much as they can,

00:32:14
but the patient's not going to travel hundreds or thousands of miles away

00:32:16
when they have a complication, right?

00:32:18
They're going to go to the local ER.

00:32:19
I think some of these programs come up with agreements with primary

00:32:23
care doctors to do some of the post operative care, which may

00:32:25
not be the best situation either.

00:32:28
The patient goes back in the community, if they've had a procedure

00:32:31
and they're having an issue, or if they go back to the community and

00:32:33
they've been told to the COE, look, I don't agree with this surgery.

00:32:37
Now, what do I, as a community provider who maybe has been treating

00:32:41
that patient for a long time, now where do we go from there?

00:32:43
How do I reconcile that?

00:32:45
Now I have this patient that's been turned away from a COE, their

00:32:48
employer's telling them that they're not going to cover the cost of care.

00:32:51
That makes for some difficult conversations and we don't have, as far

00:32:55
as I know, good data on the outcomes.

00:32:57
What happens to patients that go to a COE and are told that they

00:33:01
don't need a certain treatment and end up back in the community?

00:33:04
What's their ultimate outcome?

00:33:05
Do they end up with surgery in the community?

00:33:06
Do they do okay?

00:33:07
Do they not do okay?

00:33:08
They not end up with surgery, do they end up with another treatment,

00:33:10
do they eventually get better?

00:33:12
You know, that data we really don't have.

00:33:14
Like so many things, it's not like any given idea is good or bad.

00:33:18
It's a lot of it has to do with devils in details and the

00:33:23
execution really matters here.

00:33:25
It would be up to any employer or plan sponsor who's thinking COE

00:33:32
model to really think through some of the executional elements here.

00:33:36
As with so many things, and listen to the show with Al Lewis, 331, for a

00:33:42
deep dive into this, also the show with Cora Opsahl, this comes up, it's up to

00:33:46
the plan sponsor to take a broad view on the actual impact of the program.

00:33:51
Because as you just mentioned, if the COE, the Center of Excellence

00:33:54
program vendor, is only measuring the impact in cost savings or ROI on the

00:33:59
patients who got operated on, And then the patients who didn't get operated

00:34:03
on are tallied up as zero dollars and no further costs are considered.

00:34:07
That's not going to be accurate.

00:34:09
A lot of things about the concept of a Center of Excellence model

00:34:12
makes sense and you're right, it's all about the execution.

00:34:15
I don't think you necessarily have to send patients hundreds or thousands

00:34:18
of miles away from their community.

00:34:20
It may take some work and again, it's incumbent upon us in the community

00:34:23
to, you know, come with our data and prove that we're doing good work,

00:34:26
whether it's at our practices, a surgery center or local hospital.

00:34:29
But I think the concept of the COE can be local.

00:34:34
One thing that I have heard more than once also from employers is this whole idea of

00:34:39
efficiency and it's very inefficient to have lots of regional contracts, right?

00:34:45
So you've got a national workforce, you've got a couple of patients

00:34:48
in all these different markets.

00:34:50
It's a lot easier to set up a COE network where everybody flies to

00:34:56
a limited number of Centers of Excellence's, as opposed to having

00:35:00
lots and lots of local relationships.

00:35:03
So you can definitely kind of see why this winds up happening.

00:35:07
You know, you think about value based care, you kind of have to understand.

00:35:10
Who the quality provider organizations are within any local market.

00:35:15
You can't just keep flying people around for everything, right?

00:35:19
So as the data, maybe the quality data becomes more ubiquitous, it

00:35:23
becomes more possible to do some of the stuff that we're talking

00:35:27
about within the local community.

00:35:29
I think there is an opportunity sort of on a national level for high quality,

00:35:33
high value providers, centers that aren't necessarily traditional Centers

00:35:37
of Excellence, academic medical centers as we think of them, to band together

00:35:41
and say, you know, as a group, as this network, regional nationwide

00:35:46
network, we're going to follow similar protocols, we're going to report.

00:35:50
Our outcomes to you, we're going to have our own vetted providers and

00:35:55
vetted centers, almost like a franchise model or under some umbrella where

00:36:00
we've all kind of agreed to adhere to these standards and report our data.

00:36:05
You know, we're in our own local markets, but we're sort of under

00:36:07
the same national umbrella that we can approach self insured employers.

00:36:11
And you know that if you go to one of the providers that's in this self

00:36:15
curated network, that you're going to get good quality care because you

00:36:18
have the data as it's reported to you.

00:36:20
So, surprises that we have discussed here is this whole 90 day thing that everything

00:36:25
falls on the shoulders of the orthopedic surgeon to pay for regardless of whether

00:36:29
it's associated with the surgery or not.

00:36:32
Number two, commercial payers, not a huge fan of bundles, actually, it turns out.

00:36:36
Number three, this move to coordinate with PCPs and specialists.

00:36:41
And we talked through some of the interesting nuances there.

00:36:46
And then lastly here, we talked about COEs.

00:36:49
Centers of Excellence, the Center of Excellence models, not a magic bullet,

00:36:53
not that anyone thought there was, but there is some interesting implications

00:36:57
here, especially as it relates to taking the patient out of the community.

00:37:01
Dr.

00:37:02
Ben Schwartz, is there anything I neglected to ask you that

00:37:05
you think we should cover here?

00:37:07
I think, look, there's opportunity here.

00:37:09
We've learned some important lessons.

00:37:10
I think we'll continue to learn and evolve.

00:37:13
I think in the future, it's going to be mandatory and not voluntary

00:37:17
as we've seen before in the bundle.

00:37:18
So I think it's incumbent upon those of us, particularly at MSK,

00:37:21
particularly hyponatric arthritis and back pain, where a lot of the spend

00:37:25
is to understand this, to try to get a seat at the table, to try to be

00:37:30
proactive in having these conversations.

00:37:33
Hopefully, on the other side of the equation, the government, CMS, CMMI,

00:37:37
self-insured employers, commercial insurance plans are willing to come

00:37:41
to the table with us and work with us to collaborate on these programs,

00:37:46
cause I think that's really where we're going to see the most sustainability.

00:37:50
There's been some fits and starts.

00:37:51
We haven't yet hit on the right formula for sustained success.

00:37:55
I think really the only way we're going to do that is, is to have everybody coming

00:37:58
together and making sure that everybody's pulling in the right direction.

00:38:02
That's a great inspirational message.

00:38:04
There's a collaborative opportunity here so patients can get better care

00:38:09
at an affordable price and everybody's knowledge is required to make that happen.

00:38:13
Orthopedic surgeons, I think, are known for, for being entrepreneurial

00:38:17
and seeking out their own solutions.

00:38:19
And I think we are seeing pockets of that where, you know, if you can't

00:38:23
get traditional people to come to the table, then you'll figure out

00:38:26
ways yourself to try to make it work.

00:38:29
And so there's a lot of, I think, exciting work being done.

00:38:32
To that end, by people who really understand this and understand where

00:38:35
things are going and are really trying to help create that future.

00:38:38
For sure.

00:38:38
And it's going to take people who really understand the nuances here

00:38:41
and really understand what's going on in order to actually create

00:38:44
a future that's going to work.

00:38:45
Dr.

00:38:45
Ben Schwartz, where can people find your blog?

00:38:48
Yeah, so the blog is Dem Dry Bones on Substack.

00:38:51
There's a link to it on my LinkedIn page, Benjamin Schwartz, MD.

00:38:56
I'm happy to connect with anyone.

00:38:58
Dr.

00:38:58
Ben Schwartz, thank you so much for being on Relentless Health Value today.

00:39:02
Yeah, thank you, Stacey.

00:39:02
My pleasure.

00:39:03
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