even more."
It's critical to drill down to specific case cost numbers before negoti-
ating with insurers, so you know how much profit margin to build
into a bundle. "That's where surgery center administrators and physi-
cian-owners have an advantage," says Dr. Page. "They know exactly
how much cases cost and can often manage those expenses more
effectively than their hospital counterparts."
Successful negotiation also demands knowing how much insurers
are currently paying for procedures and post-op recovery care. For
example, insurers that pay facilities $30,000 per joint replacement plus
an additional $25,000 for recovery care under the unbundled fee-for-
service payment model might be willing to pay facilities $50,000 in a
bundle. It's a win-win: The facility is earning more per surgery in
exchange for taking on more risk, while the insurer is paying more for
each case, but less for an entire episode of care.
You might be able to get creative with how you structure a bundled
contract because insurers are attracted to payment stability and pre-
dictability. "They might pay more per case, but won't have to worry
about wild fluctuations in costs due to post-op complications," says
Mr. Domyahn.
You must also determine how to remove non-value-added compo-
nents of a patient's care to drive savings and increase profits, while
still maintaining high-quality outcomes. While there's some concern
among insurers that facilities will cut corners to increase profits, Dr.
Page says post-op care is one of the biggest cost centers that facilities
can focus on to reduce the expense of an episode of care. Sending
younger, healthier patients home the day of surgery is one of the
biggest ways to save, she says.
Mr. Domyahn agrees and says that's why insurers are attracted to
partnering with outpatient facilities. "Instead of automatically sending
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