This article was written by Lisa Miller.
As the healthcare sector continues to explore its options for payment models, bundled payments are becoming more popular.
To maximize profit from this type of payment model, I recommend three overlooked bundled payment strategies that I discuss below.
The Rise in Popularity of Bundled Payments
In October 2018, the Centers for Medicare and Medicaid Services (CMS) announced its commitment to bundled payments as an effective value-based payment model. In addition, it announced plans to launch new mandatory and voluntary programs related to bundled payments.
At VIE Healthcare Consulting, we are now seeing more payers and healthcare providers building the systems and infrastructure they need to implement bundled payments.
Bundled payments generally provide a single, comprehensive payment that covers all of the services involved in a patient’s episode of care. According to the American Hospital Association (AHA), they can also ‘..align incentives for providers – hospitals, post-acute care providers, physicians, and other practitioners…’– and encourage them to work together to improve the quality and coordination of care.
For many healthcare providers, bundled payments are regarded as an effective alternative solution, falling midway between traditional fee-for-service payments (minimal financial risk) and ‘full capitation’ (or full financial risk).
Three Overlooked Strategies
As I discussed in my previous article, it is possible to maximize profit from your hospital’s bundled payment strategies. In my experience, these are three of the most frequently overlooked for your organization to consider:
Strategy 1: Monthly Measuring and Reporting of Supply Costs
Supply chain costs remain the number one cost for hospitals outside of labor costs. They must be constantly measured for price creep in supply and implant and pharmacy costs. Price creep occurs when suppliers slowly increase prices over time or subtly apply fixed discounts to new price lists. When these shifts are ignored or unidentified, both price creep and product creep can have a major impact on your hospital’s profitability. Your hospital’s supply chain must be active in bundled payment initiatives.
Strategy 2: Ensure Your Vendor Rebates Are Being Accurately Mapped to Your Bundled Payments
This should be carried out via your Medicare cost reports. For example, if your hospital receives rebate credits for your total knee or your total hip implants, it is essential that those rebates are reported accurately. They can be mapped directly to your cost reports. For instance, you may receive rebate credits for your DRG469 or DRG470 to enable you to obtain credit for those cost savings for your bundled payment.
Strategy 3: Survey Patient Families in Your Hospital Waiting Rooms
For me, this is one of the most important aspects to enable you to gain an understanding of your patient experience. Families possess a wealth of knowledge and insights, which won’t attract penalties for your hospital, compared to other ways of measuring patient satisfaction scores. Their responses can also help you to dramatically improve patient satisfaction.
Healthcare ethnography offers an innovative way of helping your hospital to discover front line insights to transform patient care, the patient experience and save money. Ethnography services from VIE Healthcare provide your hospital with a solution to achieve and maintain operational efficiency in what is often a disruptive healthcare environment.
At VIE Healthcare, we work with ACOs, hospitals and physicians to identify areas of performance improvement. Our clients improve their financial performance by 12% on average, supported by our deep analytics and ability to manage the bundled payment model effectively.