Initiating a Bundled Payment Project

June 17, 2014
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bundled payment for medical treatment“A journey of a thousand miles begins with a single step.” – Laozi, Founder of Taosim

A bundled payment project has great potential to bring positive change to a provider organization. But like all change, it will cause disruption as this new model is designed and implemented. And like all such projects, planning from the outset goes a long way to ensure success.

bundled payment for medical treatment“A journey of a thousand miles begins with a single step.” – Laozi, Founder of Taosim

A bundled payment project has great potential to bring positive change to a provider organization. But like all change, it will cause disruption as this new model is designed and implemented. And like all such projects, planning from the outset goes a long way to ensure success.

Like all projects, someone needs to champion the effort. This is the person who will evangelize within the organization to get the budget, resources, and mindshare that will ensure project success. This person is often from finance or may be a clinician.

The project team needs to be broad since bundle design touches most areas of the organization. You’ll need to include everyone from finance to IT to compliance. An important lesson learned from other bundled payment initiatives is that clinical involvement is key from the start. This means including physicians, nurses, and other clinicians in significant roles where they can contribute to and drive the project. Bundled payment programs by definition will change care pathways so clinical “buy-in” is essential for success. Gaining clinical “buy-in” at an early stage attacks challenges on two fronts: First, financial – because unlike the traditional fee-for-service payment model, bundled payments do not engender the same billing potentials; and second, clinical – because the standardization of procedures and treatments need to be adopted by everyone to allow the bundled payment system to work. You will also find that your clinical staff has important insights in helping to drive efficiencies and cost savings.

Of course, you won’t know if you’re successful at the end unless you define success from the start. This means creating your success metrics from the beginning. Metrics in areas such as financial, clinical, and customer satisfaction will help you monitor how your program is working and where you can (continually) improve. For example, you may define readmission rates of <2% as a target.

Before establishing performance metrics, you’ll need to understand where things are today. This means you’ll need to establish baselines for all of your key performance metrics. You may already have some of these such as your readmission rate. But if you’re planning a total joint replacement program, can you identify your current readmission rate for those cases only? Perhaps you’d like to begin a customer satisfaction survey for your new program. In that case, you wouldn’t have a current baseline metric so you’d have to establish your own target (be reasonable). Your IT department will provide resources you’ll need for this and there are numerous software packages available to help support your effort.

Finally, bundled payment programs don’t work if you can’t understand your costs and keep them under control. For many healthcare organizations, this challenge is new. The area of cost control is probably the single most challenging part of bundled payment programs. Your finance team will be able to help but brining in outside consulting is common and you shouldn’t shy away from this. Strong consideration should be given to implementing formal cost management systems and processes (including new software).

The hardest part of getting started is… getting started. Bundled payment programs are great opportunities and the first ones in have a tremendous advantage over the competition. Join me for an upcoming free webinar on “A Practical Guide To Implementing Bundled Payment Programs” on July 15th. Click here to register.

by Sheldon Hamburger