To successfully make the transition to bundled payments, “Everyone has a role to play,” says Trisha Frick, Assistant Director of Managed Care, Johns Hopkins HealthCare LLC. In this interview with IHI Content Development Manager Jo Ann Endo, Ms. Frick, faculty for IHI's Preparing Care Teams for Bundled Payments Expedition, draws from Johns Hopkins’ lengthy experience with bundled payments and talks about the importance of teamwork.
Q: Would you describe your organization's bundled payment program?
We enter into written agreements with payers and employers for specific service-line procedures where there's a lump sum reimbursement, or a fixed price for a specified procedure. We also include a threshold length of stay with an outlier per diem for each procedure. In other words, if the patient is in the hospital beyond what’s deemed the threshold length of stay, then we get an additional payment per inpatient day. However, the incentive is for us to manage the care and control the cost with the best outcome; if we can provide the care for less than the fixed payment, we are still paid the full bundled rate.
At a minimum, the bundled rate includes physician and hospital services. There are a few contracts that include pharmacy, home care, and housing. It depends on the contract and the type of service line. We've been doing bundled rates since 1995.
Q: For which areas do you have bundled rates?
We have cardiovascular services (mostly open heart), transplants (both solid organ and bone marrow), and joint replacement.
Q: How did the Affordable Care Act (ACA) change things for your organization?
There's definitely been more interest in bundled payments since enactment of the ACA. We are frequently meeting with the physicians and clinical teams to discuss potential new opportunities. We are trying to be innovative and do things differently. An example of this is our joints travel program. This is an agreement that means employers pay the expenses for patients to travel to Johns Hopkins for their joints procedures. This contract has been active for a year and has resulted in more volume than anyone anticipated.
Q: How did you handle the unexpected level of interest?
One of the most effective things we did was create a weekly operations team meeting. We would most often meet in person and hash out the areas and processes where we were not meeting the requirements of the program. We worked together as a team to determine the most efficient and effective way we could organize each step of the entire process.
Q: How did you approach breaking down the process?
We were participating in the IHI Joint Replacement Learning Community initiative, offered by IHI and the Harvard Business School. The Joint Replacement Learning Community (JRLC) provided us with the structure to break down the episode of care so we could look at each phase of the joint replacement process individually. I think if you try to look at the entire episode of care, you will have a difficult time determining where to start.
Q: Most of the focus on bundled payments has been on reducing costs, but are there also benefits to patients?
I think the benefit for patients is that we have streamlined and consolidated the care. We also now have this very clear care plan that we articulate to patients prior to surgery so they know what to expect: You will come here on this day. This is what will happen. You can expect the hospital to discharge you on day two. You will start physical therapy the day of surgery. We are also closely monitoring outcomes.
Q: What are your top three tips for other organizations making the transition to bundled payments?
You have to have a physician champion who really wants to do this and change the way we deliver care.
I also think you need to have an integrated multidisciplinary team that is willing to look at the care process differently and work together to implement change. If you have a group that's resistant to change and doesn't work well together, it's not going to happen.
You also have to have access to some type of analytics. That should include not only financial information, but outcome data as well so you can evaluate cost as well as outcomes.
Q: Why do you think it’s essential to have a physician champion in particular?
Physicians really are the main interface with the patient. Also, in a physician-driven organization, you need the physicians on board or change is not going to happen. Obviously, it takes more than physicians to make big changes, but I think physicians have to be part of it.
Q: How did you engage all the necessary stakeholders?
We had the monthly ortho-joint practice council where we bring in everybody from the clinic staff, anesthesia, the OR, physical therapy, nutrition, etc. It was important to bring them all together to show that everyone has a voice. We said, “We need your input. We'll all be working on this together.”
It’s also important to have communication up to senior leadership, including administrative and financial. We made an effort to engage and inform people throughout the organization. Everyone has a role to play because if you have one piece falling apart, the whole process falls apart.
We could really see the value of each person when we initially had the unexpectedly high volume of referrals and there were bottlenecks. We saw how we needed each and every person to be responsive and to be part of the team.