A hospital in New York and an orthopedic physician practice have achieved a symbiotic relationship that includes a successful bundled payment initiative, and both parties say this kind of cooperation should be a goal for more healthcare organizations.
Leaders at South Nassau Communities Hospital in Oceanside, NY, and of Orlin & Cohen Orthopedic Associates (OCOA) recognized that by working together they could improve quality and patient satisfaction, says Mark Bogen, senior vice president of finance and chief financial officer at South Nassau.
Bogen worked closely with Craig Levitz, MD, chief of orthopedics at the hospital and managing partner of OCOA, which has projected revenues of $75 million this year. Levitz has been extensively involved with quality improvement projects at the hospital, and also with purchasing decisions regarding implants.
Most of the orthopedic surgeons operating at South Nassau are employed or affiliated with OCOA, giving Levitz influence over them and the way they operate. That was a significant benefit when the hospital and OCOA wanted to work more efficiently.
“In a lot of hospitals you would have a great many surgeons who are not affiliated with each other, so any improvement project is going to be like trying to herd cats,” Bogen says. “In addition, our joint replacement surgeons are key to us being part of the Medicare bundled payment program, which we joined a year ago.”
Medicare encourages bundling for 48 conditions under the Bundled Payments for Care Improvement (BPCI) Initiative, and knee and hip procedures have been the most popular procedures for voluntary bundling. South Nassau voluntarily joined BPCI under the demonstration project, but mandatory bundling took effect in April. Any bundled payment initiative requires more communication and cooperation among caregivers because they are responsible for outcomes for 90 days after discharge. That gives everyone an incentive to work together more than they might have in the past.
South Nassau worked with OCOA to assess patient needs accurately, directing many patients to the hospital’s sub-acute rehab, home care, or transitional care units. OCOA surgeons can be involved in a patient’s care from the original testing all the way through rehab.
“That allows a greater control over the post-surgical process,” Bogen says. “So far the results have been excellent from a quality perspective, and the bundled payment requirements are tied in so directly to quality outcomes. Patient satisfaction also has increased nicely.”
As a result of the improved outcomes under the BPCI, both parties benefitted financially. South Nassau received a bonus under the Shared Savings Plan that was near the maximum allowed, and OCOA received a significant portion, Bogen says.
Levitz notes there can be tension and animosity between a hospital and physicians, because the hospital tries to exert some influence over how they practice and the physicians try to maintain their autonomy. Levitz and Bogen worked to avoid that adversarial relationship and treat each other as partners with mutual interest.
“It’s not a situation where doctors and the hospital each want as much they can, no matter how it affects the other,” Levitz says. “We saw that with the bundling we were in this together and it benefitted both of us to respect each other’s interest. If there was a deal that was good for us but bad for the hospital, we would pass it up because we didn’t want to hurt our partner. South Nassau did the same for us.”
Similarly, Levitz also offers another piece of advice for hospitals and physicians entering into a partnership: Be careful about drawing a line in the sand.
“There are always egos at play in medicine and everybody thinks the grass is greener on the other side,” Levitz says. “So hospitals say if you don’t do it this way, you can find another hospital. And physicians say if you don’t do what we want, we’re leaving.”
Ultimatums like that rarely work out well for either party, Levitz says. Sometimes the better part of valor is to achieve a lesser goal in the moment in order to preserve your long-term goal, he says.
“When there is $5 million on the table, people are reluctant to take $3 million,” he explains. “But sometimes you should take $3 million to ensure there are more $5 million deals in the future.”
The hospital’s success with orthopedic bundling has led to the possibility of participating in other bundles. That decision would not be made lightly, Bogen says, because many of the other procedures that can be bundled are more difficult to manage than orthopedics. The hospital also would want to partner with a physician practice in the same way it did with OCOA, and finding that kind of synergy is not easy, Bogen says.
“This experience with Orlin and Cohen has given us a taste of what happens during the whole episode of care, rather than just what happens in the four walls of the hospital during an inpatient stay,” Bogen says. “There’s no doubt we will take that knowledge and apply it elsewhere. The question is just where and when.”
Bogen says he and other hospital leaders were shocked to learn how much of healthcare costs are incurred outside the hospital, showing the need for post-acute partnerships. The orthopedic bundling experience showed him that a project like this can’t be an administrative mandate. There must be clinical leadership if the program is to be successful, he says.
“There has to be a partnership. The clinicians have to take the lead in this,” Bogen says. “You also need technology to support it, and a strong care management system that looks outside the hospital rather than being so hospital-centric all these years.”