Diagnosing patients in need of a joint replacement is a science and implanting prosthetic joints just so is a technical art, but health care is ultimately a business. Transforming diseased joints into perfectly functioning hips and knees won't keep the doors open and the lights on. But running a value-based total joints program will, and that begins with mastering a bundled payment strategy a set fee negotiated with insurers for care delivered by multiple providers over an entire episode of a patient's treatment, which begins when surgery is scheduled and ends at 90 days post-op. It's the perfect risk-reward model you measure outcomes, strive to reduce expenses and limit complications that adds value and a renewed ability to manage your revenues and costs. Following these 5 steps will help you build your bundled payment program.
1 Know the costs
You can't price your bundle without first knowing exactly what you spend on every element of the total episode of care, which can be divided into 3 parts:
- Base facility cost. Include the expense of having patients complete their histories and physicals and undergo pre-op lab tests (if both will be in your bundle). Add in the costs of all medical and surgical supplies (including implants and consumables), nursing staff, pharmaceuticals, durable medical equipment, pre- and post-op X-rays and scans, and physical therapy all the elements needed to prepare patients for surgery, perform the procedure and help them recover.
- Surgeon's fee. The surgeon's fee is based on reasonable fair market value for their cost of delivering their services their time and resource utilization necessary to perform total joint procedures. First, calculate how many hours they spend with a typical patient from the initial clinic visit through to the 3-month post-op visit. Multiply the number of hours by their average practice cost per hour.
- Anesthesia fee. Complete the same exercise for your anesthesia team. Determine how many hours they spend with patients to perform pre-op assessments and deliver anesthesia, then factor in their average practice costs per hour.
Finally, add a reasonable margin to the facility cost, the surgeon's fee and the anesthesia fee. The margin should be the same for all three.
2 Include downstream providers
Determine who's responsible for providing post-op services during the entire 90-day episode of care. If these providers are not employed by or tightly aligned with your facility, negotiate up-front fixed fees for their services, which account for a significant cost driver during the post-op care of joint replacement patients. Controlling these costs is therefore a major opportunity to create added value to the bundle.