Hoag Orthopedic Institute's risk-based, bundled arrangements & growth — 3 Qs with top leaders


With a long-standing value-based care delivery model, Irvine, Calif.-based Hoag Orthopedic Institute has cared for more than 1,000 commercial bundle patients and nearly 3,000 under Medicare's bundled payment program.

Becker's Spine Review gleaned insights from two leaders at HOI: Jennifer C. Mitzner, CEO, and James T. Caillouette, MD, founding partner, chief strategy officer and The Joan and Andy Fimiano Endowed Chair in Orthopedic Surgery at Hoag Memorial Hospital.

Note: Responses have been edited for style, clarity and length.

Question: How long has HOI been doing risk-based contracts and bundle agreements? How has HOI's strategy regarding risk-based and bundled contracts changed in that time?

James T. Caillouette, MD, and Jennifer C. Mitzner: HOI Surgery Center began a bundled payment travel program more than a decade ago with patients traveling from around the country for their orthopedic services. Most of these patients were employees of self-insured companies who were seeking elective procedures. [Dr. Caillouette] participated on the advisory board for the Integrated Healthcare Association's pilot project for bundled payment in California. HOI was founded as a value-based provider model, and our experience allowed us to enter into risk-based contracts with Aetna, Cigna and Blue Shield in 2011 during the IHA pilot, and to continue bundled payment with these commercial payers and others to date.

We have expanded and evolved our bundled agreements based on key learning [and] data analysis, and through sharing our outcomes with key stakeholders, including our payers and contracted employers.

Our bundled payment model has enjoyed significant growth year after year, thanks to our nationally ranked outcomes, reputation and value-based fee structures. We have also invested in improving the patient experience at HOI. Many patients come from out of town; therefore, we have assembled a team of experts who help to navigate their entire trip and personal care experience. As employers seek solutions to improve access to high-quality care and seek cost savings, bundled payment models will continue to grow in popularity. Our bundled payment patients and their employers report a high degree of satisfaction with this program.

Q: How has implementing bundle agreements at your ASCs improved operations and/or financial stability?

JC & JM: Across the nation, there has been a revolution in the past several years in performing more joint replacements in ASCs. When we founded HOI, we included both an inpatient 70-bed hospital as well as two ASCs, anticipating that the value-based model would demand a lower-cost continuum of facilities. Our surgery centers were pioneers in providing outpatient hip and knee replacement surgery beginning in 2008. Today, our outpatient joint replacement model is evolving, including the recent development of our enhanced recovery program, which standardizes our comprehensive pre- and post-op care model. ERP accelerates the recovery process by integrating physical therapy, ASC-based post-clinical care and at-home care into a meaningful system across our continuum. We are also currently involved in a clinical trial to measure the effects of wearable technology to support physical therapy and recovery. This year, we have added a third ASC into our model, providing greater access to care for our patients and more block-time availability for our team of orthopedic surgeons. By increasing our capabilities in care delivery for more complex cases across our spectrum of facilities, we have increased our financial stability.

Q: Are there any potential pitfalls to risk-based agreements?

JC & JM: Organizations starting bundled payment negotiations should understand their costs, outcome data and the literature for a given procedure. If you don't have this information, your risk of loss will be high, and you should delay contracting until you do.

They need to look at procedure-specific data and understand what drives the highest risks for postoperative complications. Large-scale data analytics are extremely helpful in this regard and should be based on national data — that's what payers are looking at. Everyone is mining the data and trying to offset their risk, and this is a significant factor in negotiations. As a provider, you should risk-stratify your anticipated patient population and then put systems in place to mitigate these risks.

Interested in participating in future Becker's Q&As? Email Angie Stewart at astewart@beckershealthcare.com.

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