One Health System, Two Procedures
By Jay Hancock/KHN
To understand how the health law is supposed to fix the mediocre, overpriced, absurd medical system, you could read wonky research papers on bundled payments and accountable care organizations.
Or you could look at what’s going on at Baptist Health System in San Antonio.
Under the potent lure of profit, doctors, nurses and managers at Baptist’s five hospitals have joined forces to cut costs for hip and knee replacements, getting patients on their feet sooner and saving taxpayers money.
“What we’ve seen is just incredible from a cost savings standpoint.”
“Everybody was aligned on this,” said Michael Zucker, Baptist’s chief development officer. “What we’ve seen is just incredible from a cost savings standpoint.”
Baptist made money doing what used to be industry heresy: reducing patients’ use of the medical system.
The hospital group made a deal with Medicare, the huge government program for seniors, as part of an ambitious array of experiments authorized by the Affordable Care Act.
Medicare let Baptist take responsibility for the whole process of replacing knees and hips, from admission to surgery to rehab and anything else that happened within a month. (Traditionally the system, essentially tied with Methodist Health System as the region’s biggest, managed only what happens within its doors.)
Then Medicare lowered the average amount of what it pays for all that care by 3 percent, giving Baptist a lump sum for each patient getting the procedures. If the system and its orthopedic surgeons reduced costs below that price, they could keep the difference and divvy it up so long as quality didn’t suffer. If costs went up, Baptist was on the hook.
This is a purified form of the health law’s recipe to save health care: Get hospitals, doctors and other providers to work together. Cap their costs. Offer incentives to save and penalties for breaking the budget. Repeat.
A preliminary study of the tests at Baptist and elsewhere, overseen by the health law’s Center for Medicare & Medicaid Innovation, found substantial savings along with shorter patient stays in the hospital and lower use of expensive nursing facilities afterward. Continue reading