OIC brings an incredible proposition to the table for US Healthcare: Cut your orthopaedic implant spend in half. For those in the industry familiar with current costs, you know immediately that that is an eye-popping number. Savings are in the billions. Given the hullabaloo over healthcare costs, it would seem logical that hospitals would be tripping over themselves to take advantage.
So why haven’t high-value implants gone mainstream?
Fee-for-service is a concept brought to fruition nearly seventy years ago in healthcare and it has literally paralyzed hospitals from being able to save money on anything outside of rubber gloves and booties. In short, fee for service means that one is paid for something they did, not achieved. Irrelevant of outcome, a person or facility provides a service and takes a fee for doing so. If the outcome is poor and the service has to be provided again, a fee is gathered, again. It doesn’t matter what job you did, just that you did it.
Last week I spoke with someone at the center of the reimbursement universe, sitting like a sun between the provider, facility and payer. We talked at length about the insurance industry and their inability to drive incentives for both doctors and hospitals to truly care about the price of orthopaedic implants. It’s hard to understand as incentivizing providers to save their patients money is so logical. If a generic implant is available, is the clinical equivalent to a name brand implant, and it saves a thousand dollars, we should be shaping reimbursement to steer the doctor toward it. This mindset could bring sweeping change to healthcare without government intervention. The savings would be so large that premiums paid for insurance plans could come down. That’s how big it is. Well, that was the problem, according to my newly found Yoda of reimbursement. For one, the insurance companies’ infrastructure is not set up to accommodate these kinds of reimbursement schemes. They lack data and the subsequent analytics for a formulary approach to incentivize downward price pressure for healthcare services. Instead, they just deny reimbursement.
According to Yoda, the episodic or total care reimbursement model must be in place before downstream supply chain processes can change and commoditize what has falsely been propped up as specialty, or physician preference items. After all, the value is in the doctor who uses the plates and screws, not the plates and screws themselves. Episodic or total care reimbursement is the idea of a single reimbursement for a patient’s required care – one reimbursement check for the doctor and hospital to share. Furthermore, as episodic care is systemic – so is a fundamental change in healthcare reimbursement. It’s all encompassing. Be it cardiovascular, orthopaedics or oncology, hospitals’ and doctors’ interests will be aligned, and with that a welcomed sigh from Joe Q Patient.
There you have it. Seventy years of misguided train track that has to be pulled up in time to prevent the complete collapse of our ability to take care of ourselves without having to sell the farm. This is America. People don’t get paid for doing something. They get paid for doing something well. They get paid for doing it better, faster, and cost-effectively. With total care reimbursement, facility and provider are paid for their performance. We get everything else right in this country, it’s time healthcare follows suit.