Orthopedic and spine service lines represent great opportunities and challenges for facilities, both acute and ambulatory. They require strong leadership, savvy negotiation with surgeons and payors and clearly defined, evidence-based quality protocols. As facilities move toward treating patients through the continuum of care, the key to a successful orthopedic and spine service line will be integrating the critical elements to create a coordinated delivery system. Walter Spires, an orthopedic thought leader and CEO of ANOVA Orthopaedic Solutions, summarizes below the "5 P Model" of an integrated orthopedic network.
As new care and payment models emerge, an important first step in creating an integrated orthopedic network is aligning agendas and incentives of the surgeons with those of the facility, according to Mr. Spires. Defining desired patient outcomes, quality metrics and measurable objectives are essential to facilitating success as facilities and surgeons work together to improve quality and reduce cost.
2. Process. The process includes the entire perioperative workflow: preoperative, intraoperative, postoperative. "This should be the easiest pillar to establish except for one thing: processes also involve people," Mr. Spires says. "The best perioperative processes and most efficiently designed surgical suite workflow do not matter when someone calls out [sick], and nurses and techs get pulled from one team and placed elsewhere to cover cases." Last-minute schedule changes can cause delays and frustration. Success takes a lot of commitment and work by all stakeholders, including surgeons. Cross-training and accountability are critical to success.
3. Product. The product component of an integrated orthopedic network refers to implants and ancillary products required in orthopedic and spinal procedures — "the oft-dreaded [physician preference item] and price wars," as some facility executives and supply chain managers refer to them, according to Mr. Spires.
In some larger systems and facilities, conflict over products has improved in recent years due to cost constraints and decreasing reimbursements, Mr. Spires says. In an integrated orthopedic network, facilities work with surgeons to discuss physician preference items and whether the cost accurately reflects the quality and patient requirements. "Programs like bundled payments and shared savings models can help in this area. However, the current high price/high service/surgeon and implant company relationship model has been in place for decades. It will not be disrupted easily or go quietly. Focus needs to shift to quality, performance and value," Mr. Spires says.
4. Payor. The payor can be CMS, a private insurer or a large company that is self-insured. Under value-based purchasing and other payment models, some payors are creating bundled payments for different procedures, such as hip, knee and shoulder replacements. To profit under bundled payments, facilities and surgeons need to partner to optimize efficiency and reduce cost so they can share savings.
In such emerging care and payment models, payors shift more of the financial risk to the facility-surgeon side. Procedure prices may be capitated and savings below that ceiling shared between the providers and facilities. In addition, facilities and surgeons need to achieve high-quality outcomes as payors may shift business to facilities (inpatient and outpatient) with the best value in terms of outcomes and cost, according to Mr. Spires.
5. Patient. The patient is obviously the "hub of the wheel," Mr. Spires says. Surgeons and facilities have always had quality patient care as the primary focus. With increased focus on quality and outcomes from the government and payor groups, facilities and surgeons must now go further in this quest to deliver quality, safety and patient satisfaction — an increasingly important metric. These measurements are now a component of reimbursement.
As more of the cost of care is pushed to the patients directly, they will also begin to price shop for the low-cost, high-quality provider and facility. Convenience matters as well, so they will be most interested in anything that can be done on an outpatient basis, according to Mr. Spires.
Finally, patients have more information today at their disposal with the click of a mouse or touch of a pad than ever. Patient word of mouth remains the best (and worst) marketing tool for surgeons and facilities, according to Mr. Spires.
The integrated orthopedic network "5 P Model" and economic impact
"Each 'P' in this integrated orthopedic network model has a financial impact," Mr. Spires says. "Providers obviously admit patients that drive volumes and top-line revenue. Processes and efficiencies are directly related to margins. Product costs have a huge impact on per-case profitability, particularly in [diagnosis-related group] situations. Payors impact volume and payment. Patients, as stated above, will have to bear more of the cost and, in some instances, have choices regarding their care."
This model represents a path to help improve quality and reduce costs, two outcomes that are not mutually exclusive, Mr. Spires says. "Success requires three things we learned as children: collaboration, communication and commitment. Easier read than done."
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As new care and payment models emerge, an important first step in creating an integrated orthopedic network is aligning agendas and incentives of the surgeons with those of the facility, according to Mr. Spires. Defining desired patient outcomes, quality metrics and measurable objectives are essential to facilitating success as facilities and surgeons work together to improve quality and reduce cost.
2. Process. The process includes the entire perioperative workflow: preoperative, intraoperative, postoperative. "This should be the easiest pillar to establish except for one thing: processes also involve people," Mr. Spires says. "The best perioperative processes and most efficiently designed surgical suite workflow do not matter when someone calls out [sick], and nurses and techs get pulled from one team and placed elsewhere to cover cases." Last-minute schedule changes can cause delays and frustration. Success takes a lot of commitment and work by all stakeholders, including surgeons. Cross-training and accountability are critical to success.
3. Product. The product component of an integrated orthopedic network refers to implants and ancillary products required in orthopedic and spinal procedures — "the oft-dreaded [physician preference item] and price wars," as some facility executives and supply chain managers refer to them, according to Mr. Spires.
In some larger systems and facilities, conflict over products has improved in recent years due to cost constraints and decreasing reimbursements, Mr. Spires says. In an integrated orthopedic network, facilities work with surgeons to discuss physician preference items and whether the cost accurately reflects the quality and patient requirements. "Programs like bundled payments and shared savings models can help in this area. However, the current high price/high service/surgeon and implant company relationship model has been in place for decades. It will not be disrupted easily or go quietly. Focus needs to shift to quality, performance and value," Mr. Spires says.
4. Payor. The payor can be CMS, a private insurer or a large company that is self-insured. Under value-based purchasing and other payment models, some payors are creating bundled payments for different procedures, such as hip, knee and shoulder replacements. To profit under bundled payments, facilities and surgeons need to partner to optimize efficiency and reduce cost so they can share savings.
In such emerging care and payment models, payors shift more of the financial risk to the facility-surgeon side. Procedure prices may be capitated and savings below that ceiling shared between the providers and facilities. In addition, facilities and surgeons need to achieve high-quality outcomes as payors may shift business to facilities (inpatient and outpatient) with the best value in terms of outcomes and cost, according to Mr. Spires.
5. Patient. The patient is obviously the "hub of the wheel," Mr. Spires says. Surgeons and facilities have always had quality patient care as the primary focus. With increased focus on quality and outcomes from the government and payor groups, facilities and surgeons must now go further in this quest to deliver quality, safety and patient satisfaction — an increasingly important metric. These measurements are now a component of reimbursement.
As more of the cost of care is pushed to the patients directly, they will also begin to price shop for the low-cost, high-quality provider and facility. Convenience matters as well, so they will be most interested in anything that can be done on an outpatient basis, according to Mr. Spires.
Finally, patients have more information today at their disposal with the click of a mouse or touch of a pad than ever. Patient word of mouth remains the best (and worst) marketing tool for surgeons and facilities, according to Mr. Spires.
The integrated orthopedic network "5 P Model" and economic impact
"Each 'P' in this integrated orthopedic network model has a financial impact," Mr. Spires says. "Providers obviously admit patients that drive volumes and top-line revenue. Processes and efficiencies are directly related to margins. Product costs have a huge impact on per-case profitability, particularly in [diagnosis-related group] situations. Payors impact volume and payment. Patients, as stated above, will have to bear more of the cost and, in some instances, have choices regarding their care."
This model represents a path to help improve quality and reduce costs, two outcomes that are not mutually exclusive, Mr. Spires says. "Success requires three things we learned as children: collaboration, communication and commitment. Easier read than done."
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