strategy+business Winter 2013 : Page 28

strategy+business issue 73 essay healthcare 28 bundled care program in which its employees can receive treatment for a number of common procedures, including joint replacement and heart surgery, at leading hospitals such as Mayo Clinic, Cleveland Clinic, and Geisinger Health Sys-tem. Because Walmart employees are located throughout the U.S., the flat fee for treatment includes airfare and lodging for the employee plus a companion. (International “medical tourism” is another exam-ple of this approach, with flat fees for procedures.) It’s worth noting that bundled care involves much more than merely grouping services with a single pro-vider and setting a fixed price. The collaboration element among differ-ent roles is crucial, meaning that the method of delivering care will actu-ally improve over time—akin to the continuous improvement concept in manufacturing. This isn’t paint-by-numbers medicine; it involves scientifically validated best practices, which constantly get reviewed and refined. It also includes in-depth counseling and guidance for patients about what they can expect (clini-cally and financially) at each step in the process. And advanced IT plays a major factor in enabling bundled care by tracking actual care inputs, patient outcomes, and costs. With-out the industry’s new system of interoperable electronic health re-cords and information exchanges (now being rolled out nationwide), this method of delivering care couldn’t exist. Although bundles are currently limited to a relatively small number of acute conditions, the idea could potentially apply to both inpatient and outpatient care, including chronic conditions that require be-havioral and lifestyle changes (such as diabetes). In fact, the model could ultimately constitute the majority of revenues for hospitals, physicians, and other providers. If that were to happen, it would significantly bend the cost curve for healthcare in the United States. Current Market Perceptions To gauge the market perceptions of bundles, we surveyed various play-ers in the healthcare system over the past year: consumers, employers, providers (hospitals and physicians), and insurers. The results were en-couraging, and they show that the idea holds broad appeal. Consumers are ready; employ-ers are cautious. Our survey of clearly attract consumers, once they understand how it works and how it differs from the traditional approach to treatment. A second survey, of employ-ers, revealed interest as well, but it is generally concentrated among larger companies. Only 5 percent of employers are actively pursuing bundled care programs, and they all have more than 1,000 employees. Many respondents say they are tak-ing a wait-and-see approach to assess results from the current wave of pi-lot programs. Not surprisingly, the biggest priorities among employers are lower costs, reduced absenteeism from workers requiring treatment, and better outcomes. Large hospitals are rolling out programs; payors are hedging their bets. We also surveyed providers more than 1,000 consumers revealed that a substantial majority (78 per-cent) find the concept of bundled care to be appealing, especially its potential for greater clarity and transparency, along with potentially lower out-of-pocket expenses. These attitudes held almost regardless of respondents’ age, health status (sick versus well), or type of insurance plan (PPO, HMO, high-deductible, and so on). But consumers do have some concerns—for example, many have serious reservations about trav-eling any significant distance to re-ceive care. Qualitative interviews with patients who had already received treatment showed that their experi-ences with bundles had been largely positive. Consumers give high marks to bundled care for its clarity about the process, from diagnosis through treatment and rehabilitation. “One-price-covers-all is attractive, but even more attractive is the promise of a coordinated team providing care and treatment,” said one participant, a middle-aged man suffering from prostate cancer. The right plan will to gauge their bundled care efforts to date (if any) and their plans for future implementation. Roughly one-third of hospitals surveyed are already pursuing the model, and another 52 percent are interested in exploring it further. As with employ-ers, the larger hospitals and health systems are jumping in first, and nearly all larger systems expect to develop bundles at some point. Of those that already have programs in place, nearly two-thirds reported cost savings. Notably, virtually all of those with programs in place say they are committed to expanding them to include more treatments and/or geographies, and most say this will happen within the next three years. Finally, we surveyed health in-surers, which are perhaps the most crucial link in the future of this concept. Insurers connect hundreds of millions of patients with millions of employers and hundreds of thou-sands of providers. We detected an

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