What if you could guarantee that your patients would have successful outcomes? Offering such a promise might strike you as risky given that unforeseen infections and complications are bound to occur even in the most diligent ORs, but the recent innovation of surgical warranties — ensuring your patients have successful outcomes or else paying to fix any complications out of your own pocket — might actually carry less risk, and hold more cost reward, for you than you might think.

Such was the gamble that Geisinger Health in Danville, Pa., took in spring of 2004. The group found that in order to build successful outcomes (and therefore have a backing to build a warranty program), it really started with forming specific guidelines for OR staff to follow. Initially, Geisinger leaders met to discuss the problems facing medicine — two of which being how American healthcare facilities spend 4 times as much money as other developed countries per capita and often do things to patients that don't have proven benefits — and began establishing not only how they could perform more successfully on patients, but also how they could save their health system money.

The group found that it boiled down to one thing: doctors' idiosyncrasies. "We knew it made no sense economically or safety-wise to have 8 surgeons do things 8 different ways," says Alfred Casale, MD, the associate chief medical officer and chairman of cardiothoracic surgery at Geisinger who helped implement the warranty program. "If there were best practices out there — if there was evidence suggesting the best way to do it and science backed it up — shouldn't everyone be doing it that way?"

90-day warranty

After 2 years of establishing best practices and other ways to ensure their patients had safe outcomes, including better patient education, Geisinger Health rolled out its ProvenCare program in 2006, which includes for patients a surgical warranty of 90 days where if the patient experiences any preventable complication, they're taken care of free of charge. It was first implemented for coronary artery bypass surgeries, but has since expanded to include 7 other surgeries, including total hip replacements, total knee replacements and lumbar spine surgeries.

The results? "Patients had better outcomes clinically from what was already a very, very good program with outcomes that were better than national averages," says Dr. Casale. "So from an already high bar, we improved clinical outcomes." Geisinger also lowered its costs through the program by eliminating unwarranted variation.

"We haven't had to make good on the warranty. Really, it's all about predictable outcomes."

"But the real moment the hair stood up on our necks and we realized we had something was when we looked at the total cost of what our insurance company was spending on these patients over a 90-day period, and it was dramatically lower than when you look at the exact same patient and run the bill to figure out what you'd pay in the old system," says Dr. Casale. "It was a 25% difference."

Although the idea of surgical warranties is still emerging in the healthcare space, implementing one in your facility could save you — and your patients — unnecessary time and money. Here's what to know about the game behind guarantees.

How it pays off

Even if your facility has incredible outcomes and the idea of implanting a warranty program appeals to you, figuring out the fiscal logistics could be daunting. That's where insurance companies come in. For them, there's a huge appeal in a warranty program: predictable outcomes.

When Dr. Casale went to Geisinger's insurance team, that was his main selling point. "They said, 'What my accountants and actuaries tell me is driving them crazy is that I can send a clone of the same patient 10 times to 10 different facilities with the same problem and get 10 completely different bills with 10 completely different things done to them, and I can't predict in any way what my exposure is going to be,'" he says. "'Give me some ability upfront to predict what my costs are going to be like. Now that's worth something to me.'"

Dr. Casale says that during talks with his insurance team, they also noted that if something goes wrong with the patient, that patient has to come back to the facility to get something redone or an infection treated that was preventable, and the insurer is getting billed again. "I'd never do that if it was my refrigerator or my washer," says Dr. Casale. "I'd call you and say my refrigerator doesn't work, and I wouldn't pay you again to fix it." Same, he says, should be the case with healthcare.

That got insurers on board. "They said, 'Transfer some of the risk for bad outcomes from me, who has nothing to do except write checks, to somebody who has some control over preventable bad things, and you have my interest,'" he says.

If you're looking to start a warranty program, talk to your insurers about creating bundled pricing, which will include the cost of every part of the surgery from the time the decision's made to post-operative pain management based off of predictable outcomes you determine with your team.

To cover the warranty, include in that bundled pricing half the average cost of readmission and the management of complications for that particular surgery. For example, if you had 100 patients and 5 had complications that cost $1,000 each, that would amount to $5,000 in expenses. If you divide that between 100 people, each would pay, in full, $50. But, under warranty, that number would be divided in half, thus amounting to all patients paying $25 rather than one paying $1,000 for their complications.

If you're unable to reach full confidence with your outcome, don't implement a warranty program until you are. "The idea of providing a warranty if you don't simultaneously do something to assure yourself that the quality of what you're offering is good puts you at an enormous risk," says Dr. Casale.

Individualized approach

If you're uncomfortable setting one standard across the board for all patients you take in, you could take a more individualized approach, as the Deuk Spine Institute in Melbourne, Fla., has done. At Deuk, patients pick the extent of their warranty program. "We'll sit down with them and say if you pay X, we'll give you this warranty for 3, 5, even 10 years," says John Stewart, vice president of the institute. However, if the patient's insurance agrees to cover 100% of the bill, they'll automatically grant the patient a warranty that typically lasts for up to 3 years.

For all warranties, the cost of that warranty is bundled into the overall payment. So, for example, if a patient were to get a laser disc repair — one of the less complicated surgeries that doesn't require implants or biologics — the bill would be $85,000, which includes the cost of the surgeon, the assistant surgeon, the anesthesiologist, the facility fees and a 3-year warranty. Plus, implementing the warranty hasn't cost Deuk anything. "We haven't had to make good on it," says Mr. Stewart. "Really, it's all about predictable outcomes."

Surgical warranties have also emerged in the ophthalmology space, in particular for cataract surgery. But unlike using best practices to ensure outcomes, ophthalmology centers like the Center for Sight in Sarasota, Fla., use tiered pricing and include the warranty as a sort of upgrade. For example, for $3,295 per eye, patients get laser cataract surgery, implantation of presbyopia-correcting IOLs and treatment of astigmatism. If they're not satisfied with their vision, they can get post-op LASIK.

Do the right thing

Although Geisinger initially received pushback for establishing "cookbook medicine," surgeons and patients eventually realized the approach was a strong one. "The goal was not to force you to buy a suit off the rack," says Dr. Casale. "In fact, we insist the suit be custom-made for you. But what we're insisting is that the tailor makes these 30 measurements and takes these 30 things into account before he starts to cut material and sew it together."

Once Geisinger implemented its warranty program, surgeons were "delighted," according to Dr. Casale. "What's happened is you've assured them because of the system that the right thing is going to happen, not depending on which nurse or PA or technician is on-call that day," says Dr. Casale. OSM