The New Playing Field

Edition: April 2014 - Vol 22 Number 04
Article#: 4467
Author: Repertoire

Need a knee or hip replacement? If you work for Walmart or Lowe’s, and you’re willing to travel to Baltimore, Md., Irvine, Calif., Springfield, Mo., or Seattle, Wash., you can get one – for free.

Domestic medical travel or tourism isn’t a new concept. But if it catches on, it may affect the way supply chain executives and suppliers transact business.

Last October, Walmart, Lowe’s and other employers joined the Pacific Business Group on Health Negotiating Alliance, San Francisco, Calif., to launch what they are calling a national Employers Center of Excellence Network, to offer the no-cost knee and hip replacement surgeries for employees.

PBGH, working with healthcare management company Health Design Plus, will oversee the network, which will include treatment for knee and hip replacement surgeries for the more than 1.5 million employees and their dependents enrolled in Walmart’s, Lowe’s and other large employers’ eligible medical plans.

Employees will receive consultations and care covered at 100 percent without deductible or coinsurance, plus travel, lodging and living expenses for the patient and a caregiver. Patients must be healthy enough to travel for the surgeries. The program is voluntary, and employees or their covered dependents can still choose to receive care from local providers and incur routine costs.

The four designated “centers of excellence” healthcare organizations for the hip and knee program are Johns Hopkins Bayview Medical Center, Baltimore; Kaiser Permanente Orange County Irvine Medical Center, Irvine; Mercy Hospital in Springfield; and Virginia Mason Medical Center, Seattle.

Quality first

That a group of employers banded together to contract for orthopedic procedures is a sign of the times, says David Lansky, PhD, president and chief executive officer, Pacific Business Group on Health.

“Our members set up the [Pacific Business Group on Health Negotiating Alliance] in the mid-90s,” he says. “At the time, they were interested in collectively purchasing HMO products in the market.” Though that aspect of the program ended three years ago, the Negotiating Alliance continues to operate as a mutual benefit corporation for joint purchasing activities. “Today, employers are very interested in contracting for high-quality care with specialized providers; and they’re looking for bundled payment packages from them.” Bundled prices offer predictability, something fee-for-service arrangements cannot.

The four providers for the hip/knee program were selected based on the quality of care they provide – not price, says Lansky. “Our premise was that, ultimately, by choosing the highest quality programs, there would be long-term cost savings, with lower complication rates and fewer repeat procedures.”

The Negotiating Alliance started with a list of around 30 programs around the country, all well-known for orthopedic care, he says. “We looked at clinical care pathways, appropriateness criteria, pain protocols, the way they manage outcomes data.” Participating hospitals agreed to collect outcomes data, so the Negotiating Alliance could track how well patients were doing 12 months after surgery. They also agreed to participate in a data registry, a number of which exist around the country. “These are ways of collecting data on individual orthopedic cases and comparing them to national and regional norms,” explains Lansky. The providers also had to agree to collaborate with each other on best practices.

Strong interest among providers

Though the criteria sound daunting, in fact, the selection process – from initial meetings with Negotiating Alliance members to final selection of the four healthcare providers – took only seven or eight months, says Lansky. Another sign of the times, perhaps.

Major providers understand what employers are seeking and why, and they’re eager to accommodate the requests of major customers, says Lansky. “Orthopedic and cardiac procedures, which are high volume and high margin, are an important part of the business strategies of these large institutions. A program such as ours gives them the opportunity to be visible in a national program sponsored by well-known employers….They also want to be pioneers in learning how to make bundled payments work.”

The national Employers Centers of Excellence Network complements Centers of Excellence programs that Walmart and Lowe’s have and will continue to offer separately from the Negotiating Alliance. In 2013, Walmart expanded its long-standing program covering transplants at the Mayo Clinic to include treatment for certain heart and spine surgeries at five hospital and health systems in the United States, including network providers Virginia Mason and Mercy Springfield, for associates and their covered dependents enrolled in medical plans.

In 2010, Lowe’s began an alliance with Cleveland Clinic in Cleveland, Ohio, to provide its full-time employees and their covered dependents enrolled in the company’s self-funded medical plans enhanced benefits coverage for qualifying heart surgery procedures.

Now that the groundwork for the hip/knee program is in place, the really hard work begins. “The hard part is communicating to the employees and their families why this is a good program, and how they can take advantage of it,” says Lansky. Given thousands of employees and family members, “How do you create awareness about the opportunity for them to save money and get higher quality of care? And once you do, you get a lot of people who haven’t traveled widely; it might be difficult to get them on a plane. So, how do you help people see the advantages and give it fair consideration?”