Providers Embracing “The Bundle”

“Capture the Bundle, ” Richard Rothman, M.D., founder of the Rothman Institute and one of the most successful physician-owned and led academic orthopedic centers in the U.S., told attendees at the recent annual meeting of the American Academy of Orthopaedic Surgeons (AAOS).

His colleagues appear to be listening.

According to a KPMG LLP poll conducted on March 26, 2014, more healthcare providers are using bundled payment systems. The biggest challenge cited by 42% of the providers is in getting physicians and hospitals aligned and controlling expenditures.

The bundled payment model package out- and in-patient costs, professional fees and post-discharge costs related to specific conditions into one payment.

44% Already Bundled

KPMG polled 140 healthcare providers, largely represented by hospitals and health systems and large scale physician groups. Forty-four percent said they are already working with bundled payments. That was up from 38% from last October. Meanwhile, 29% remain undecided, down slightly from 36% in October. According to the poll, 7% said they had no intention to offer bundle payment plans, up from 2% in the October poll. Twenty percent said they’re not there yet, but plan to.

The concern over alignment between hospitals and physicians, stated a KPMG press release, reflects a history of misalignment between physicians and hospitals payment methods and operational goals. Nearly 32% of respondents felt control of expenditures throughout the bundle posed the biggest challenge; while 16% believed the ability to harness performance information across the organization as the most significant barrier.

Key Strategies

Providers were almost equally split when asked about the key components of bundled payment strategies.

• 30% indicated that the ability to harness and manage big data would lead to success
• 28% felt providing resources for program design, administration, and provider contracting were necessary
• 27% cited commitment from top leaders as critical and 15% believed an open mind to new ideas was essential.

Changing Business Models

“We are seeing a convergence in the market happening where all players— life sciences, payers, providers—are changing their business model to create value for consumers, ” concluded Marc Berg, KPMG’s head of strategy and transformation for Healthcare and Life Sciences. “With bundle options, such as those offered by CMS [Centers for Medicare and Medicaid Services] and private-payer bundles, hospitals can reduce unwarranted admissions and readmissions, decrease lengths of stay, improve cost-effective prescribing and promote volume growth by increasing market share.”