TECHNOLOGY
Smart Medicine Bundled payment and stable orthopedic technology BY BLAIR RHODE, MD
Orthopedic implants in the US represent a multi- billion-dollar industry. I estimate 75 percent of the orthopedic implant indus-
try consists of devices that are “stable technologies,” which means they are time-tested devices with little changes in design and manufacture for many years. A stable technology means that any stake in intellectual property (IP) is dissolved, making the product a commodity. Yet, the industry has not embraced the sale of stable technol- ogy as a commodity or value proposi- tion, despite the potential for tremen- dous cost savings. ASCs in particular have an opportunity now to adopt sta- ble technology, increase profit margins and practice smarter medicine. Two divergent paths are emerg- ing in medicine: One route empha- sizes the third-party payer market, a dysfunctional economic concept in which basic free market principles do not apply. Patients walk into a doctor’s office and hand over insurance cards, expecting premiums to cover any treat- ment required. Insurance companies respond by continually trying to drive reimbursement
down, often using
Medicare fee schedules as justification for lower payments. They also often act as third-party administrators, merely pocketing a percentage of the net sav- ings achieved by forcing providers and surgery centers to take their contrac- tual fee schedule amounts.
Since self-funded entities such as municipalities and union health plans have begun to realize potential cost savings, a new road has been forged
with alternatives like negotiations of bundled episodes of care. Similarly, self-pay and high-deductible patients are looking for an all-in or bundled price for outpatient procedures, and patients are finding that their health care exchange plans are offering such narrow networks that they have no access to specialists. Due to these fac- tors—and many more—it is becom- ing clear that ASCs could be the health care facility of choice once they take ownership of implant decisions. By negotiating a single payment for the surgeon, anesthesiologist and facility, surgery centers can reward surgeons for implant choices by shar- ing the net savings on a procedure. This potentially removes concerns of an anti-kickback violation if a facility seeks to reward a surgeon with a por- tion of the net savings, since the facil- ity and surgeon must negotiate reim-
bursement amounts from the lump sum payment.
Stable Technology Advantages for ASCs
The use of stable technology can decrease costs by as much as 80 percent, according to a study, “Rotator Cuff Repair Facility Costs in an Outpatient Surgery Center and Hospital Setting,” published in the MedCrave Online Journal for Orthopedics & Rheumatology. The study analyzed surgical cost savings using stable technology and demonstrated a savings of $1,775 per case ($353.08 total surgical supply cost compared to $2,128.19). The rotator cuff anchor cost per case was $143.45 for a stable implant versus $1,094.84 for a branded implant, the study found. The surgery center in the study achieved a total net savings of $106,210 in one
The advice and opinions expressed in this column are those of the author’s and do not represent official Ambulatory Surgery Center Association policy or opinion. Financial relationships between physicians and entities raise potential legal issues for both parties and any such arrangement for revenue sharing should be reviewed by counsel.
18 ASC FOCUS MARCH 2016
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