Medtronic Invests in ASC Bundled Payment Services Provider

Medtronic plc wants a better understanding of how bundled payments work at ambulatory surgery centers (ASCs). In recent years the company has started providing services to health care providers in the hospital setting.

To gain that ASC understanding, the company invested in a company, spun off from Twin Cities Orthopedics (TCO), called Revo Health, LLC.

Revo Health was launched in 2017 by TCO to advise physician groups on how to start and manage bundled-payment programs.

Bundled Payment Initiative

In July 2015, the Centers for Medicare & Medicaid Services (CMS) announced a 90-day mandated bundled payment model called the Comprehensive Care for Joint Replacement initiative (CJR).

The Trump Administration scrapped the mandatory part in 2017 and made participation voluntary with the “Bundled Payment for Care Improvement (BPCI) Advanced Model.”

As we reported in April, private payers followed suit with their own versions. Today, approximately one-third of all healthcare providers are involved with a bundled payment style program—whether CMS or private payor.

In a previous article UnitedHealthcare, the largest private payer, told OTW: “To date, more than 15 million people, or nearly one in every three people enrolled in UnitedHealthcare benefit plans, currently access care from providers in value-based care relationships.”

The BPCI Advanced Model, also referred to as Advanced Alternative Payment Model, will officially start enrolling patients in October 2018 and will run through the end of 2023.

Results

The program will likely incentivize more outpatient (and presumably less expensive) care. At its last annual meeting, the American Academy of Orthopaedic Surgeons shared data which compared the effects of BPCI on physician groups versus acute care hospitals. The result? Physician group practices performed much better than acute care hospitals under the bundled care model. So, Medtronic has a big incentive to understand the program from their customers’ viewpoint.

Owen O’Neill, M.D., a surgeon at TCO who also serves on Revo’s board, told the Minneapolis/St. Paul Business Journal on July 18, 2018, that TCO has offered bundled payment programs through its Excel program for years and is now offering that expertise to help other independent physician groups get programs up and running.

O’Neill added that Revo provides consulting services and an in-house developed tool to help providers flag patients who are at risk for complications or who may need extra care. The company also advises groups on how to run surgery centers and provides other services.

Spine, Hips and Knees

This isn’t just about spine products. Last May Medtronic bought a Minnesota hip and knee replacement startup, Responsive Orthopedics, founded by former Tornier CEO Doug Kohrs.

Medtronic leaders told analysts it planned to use Responsive’s products to launch a joint-replacement service. Kohrs launched Responsive to develop low-cost knee and hip implants with a focus on bundled-payment programs, according to a Star Tribune profile.

As more knee, hip and spine surgeries are performed at ASCs and TCO performs many of its procedures at ASC centers rather than at hospitals, Medtronic’s investment in Revo Health is likely to garner the device maker valuable operational information to allow the company to pursue sales strategies to become a one-stop shop for ASCs.