Value Based Insurance

walmart“These large firms have shopped around and compared the value of all national medical centers, choosing to send their employees to those able to provide the best care at the lowest cost and setting an example for other self-insured companies to follow in their footsteps……………..Bundled payment systems facilitate transparent and simplified reimbursement structures, eliminating the risk inherent to procedures with high cost variability and reducing administrative costs………”

Introduction

When it is time for elective surgery, most Americans still turn to their local hospital. Self-insured companies are increasingly making the bold move to allow their employees more options by creating networks of Centers of Excellence across the country, however. By forming partnerships with selected medical facilities renowned for particular services, these companies encourage their employees and covered dependents to pursue higher quality, lower cost treatments than would be available locally. The Centers of Excellence from which patients are able to receive care differ from local hospitals in several key aspects. Facilities designated as Centers of Excellence generally perform large volumes of specific procedures, thereby increasing efficiency and improving patient outcomes. They are highly ranked both for outcomes and patient satisfaction, and are highly regarded for their adherence to evidence-based medicine. Thus, creation of Centers of Excellence networks benefits employers both through happier, healthier workers and through decreased payments for certain costly procedures.

Established Centers of Excellence Networks

Employers’ primary goals for their health plans are to improve employee health and reduce cost. A substantial obstacle to achieving these goals is the uncertainty of the costs of funding employee health care, and as health care costs continue to rise over the coming years, the need to reduce the unpredictability of employee costs becomes ever greater. Employers are increasingly utilizing regional or national Centers of Excellence networks as a means of improving employee health and reducing both quality and cost variability. A full 28% of employers that participated in Aon Hewitt Healthcare Survey 2011 have already established domestic Centers of Excellence networks, with the possibility of an additional 39% adding them in the next five years.

One of the pioneers in the establishment of Centers of Excellence has been Walmart, which has created a network by selecting facilities that excel in major elective surgeries while remaining cost-effective. Recognizing that one hospital does not fit all surgeries, Walmart created a network of six hospitals, each specializing in a particular surgery or set of surgeries. The earliest incarnation of Walmart’s Centers of Excellence program began in 2006, when the company forged a partnership with the Mayo Clinic. Since then, employees in need of cardiac or spinal surgery have been able to travel to the Mayo Clinic for consultations and treatment with no co-pay or deductible. Making travel to this internationally recognized facility easier, even expenses such as transportation, lodging, and food for both the patient and their companion are covered in full for patients and a companion of their choice. Five additional hospitals were added to the Center of Excellence program in 2012, creating a broader network specializing in an expanded array of elective surgeries.

Lowe’s has found success with a Center of Excellence program by partnering with the Cleveland Clinic to provide employees and their dependents with high-quality, reduced-cost heart surgeries. Similar to Walmart’s program, Lowe’s also provides the patient and a companion of their choice with transportation to and from Cleveland and eliminates the deductible for procedures performed at a Center of Excellence. Because the Cleveland Clinic is recognized as the highest-quality cardiac center in the country, this Center of Excellence arrangement provides Lowe’s employees and their families with the best possible care when undergoing elective cardiac surgery.

As of late last year, Boeing has also begun utilizing a similar Center of Excellence program, allowing employees and their families to receive certain heart surgeries at the Cleveland Clinic. Like Lowe’s, Boeing covers all transportation and lodging for patients and a companion in addition to their medical expenses, although some of Boeing’s employees are required to meet their deductibles before receiving these benefits.

Improvement in Outcomes

It is widely recognized that high-volume surgical facilities achieve better outcomes than those with lower-volumes. A systematic review conducted by the Institute of Medicine found overwhelming support for the relationship between high-volume facilities and surgeons and desirable outcomes.  While this review cannot establish causality, the evidence indicates that sending patients to experienced, high-volume centers of excellence will lead to more desirable outcomes. By selecting partnerships with Centers of Excellence across the country, self-insured companies allow their employees to benefit from the efficiency and skill that comes with experience and volume.

Financial Benefits

In addition to providing employees with the highest quality care, establishment of Centers of Excellence can provide self-insured companies with financial benefits. By turning to leading healthcare innovators, employers may save due to increased cost-effectiveness. For example, physicians at the Mayo Clinic will often attempt pharmaceutical therapy prior to transplantation; this type of innovative medicine not only spares the patient the risks of and recovery from major surgery, but also saves cost for the employer.  Employees or dependents undergoing surgery at experienced, high-volume centers such as those chosen by Walmart are also less likely to need follow-up surgeries, further reducing costs to the employer.

Bundled payment systems facilitate transparent and simplified reimbursement structures, eliminating the risk inherent to procedures with high cost variability and reducing administrative costs. In addition to reducing the variability in costs due to the patient’s health status, bundled payments to specific facilities will eliminate widely varying geographic variations in the cost of care, standardizing costs at a lower level.

Is This Model Replicable?

The cases of Walmart, Lowe’s, and Boeing are not unique. Many other self-insured companies are establishing networks of Centers of Excellence that provide their employees and their dependents with the highest quality care at discounted rates, both across the country and across the globe. These large firms have shopped around and compared the value of all national medical centers, choosing to send their employees to those able to provide the best care at the lowest cost and setting an example for other self-insured companies to follow in their footsteps.

About the Author

GCI is in the business of positively impacting the Quality of Life of patients by developing world-class health care organizations and enabling access to centers of excellence in healthcare. Our vision is to be a trusted and most preferred provider of strategy, management and technology services to develop world.

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