In order to develop a total knee program that delivers great patient
care with an eye toward economizing and efficiency, it's important to
examine where there's wastefulness or redundancy in your facility,
both in the OR and the business office. Consider these 5 methods to
increase efficiency and trim costs.
1. Negotiate bundled payments
The most profitable way to actually see the money you save is to use a
bundled payments system, says David Uba, MBA, CEO of Excelsior
Orthopaedics in Amherst, N.Y. To negotiate a price that will set you up
for the best profit margin, investigate payers' current pricing for an
episode of care in the fee-for-service model.
"You start with the greatest volume payer [in your market]," says Mr.
Uba. "Try to figure out what their hospital DRGs are for those cases
you want to include in your program." Next, add up the costs of each
component of care, which you can do by collecting explanations of
benefits from patients. Once you have an evidence-based guess of
what the payer is paying for a knee replacement, you have leverage at
the negotiating table.
For example, you find out an episode of care for an inpatient total
knee costs $35,000, while at your surgery center the price is only
$9,000. Add in the cost of an implant — around $5,000 — and your
facility only needs $14,000 for an episode of care. That's an immediate
$9,000 savings.
Then you can decide to pay your surgeon more for the procedure —
maybe $2,500 rather than $1,500. Or maybe give your physical therapist a
better rate — $150 as opposed to $50. Distribute the savings however you
want. As long as you don't exceed the $35,000 cost of an inpatient
episode of care, the payer will easily agree to the bundle, says Mr. Uba.
Payers will be overjoyed to negotiate a bundled payment if they can
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