Denver, CO — What if I told you one of the benefits of working at Lowes is free surgery at prestigious hospitals? How could a major employer afford such a significant benefit? It’s all in the contracting.
Lowes and other large employers identify the key surgeries they want to cover and then negotiate agreements that look a lot like accountable care: one flat rate per procedure that includes all the treatment within a certain time frame — surgery, physical therapy and care for complications that might arise.
Employees can choose to use their local surgeons and pay typical out of pockets. Or, travel to these identified centers of excellence for an all-services-paid surgery. The bundled price saves money for both employee and employer plus gives hospitals access to to a new patient base.
The Pacific Business Group on Health is one of the companies that negotiates these agreements. Their associate director Olivia Ross told NPR her team is able to negotiate rates that are 20 to 30 percent below what the companies used to pay for the procedures.
Those numbers have garnered the interest of private and public payers alike. Medicare is now trying the destination healthcare approach for hip and knee replacements in 67 metropolitan areas, including New York, Miami and Denver. They’re reportedly saving $4,000 per orthopedic patient.
Why It Matters
- For our colleagues who work on surgical products, there’s a whole world of new possibilities here. Accountable care models aren’t just happening at the typical payer level – they’re happening in the micro economies of individual employer contracts. That could point to a need for all kinds of new services, support and contracts with big rooves.
- Routine surgeries have become very decentralized in hospitals and clinics around the country. Success with models like Lowes’ could lead to the number of locations for care becoming much more compressed – making relationships with centers of excellence, hospital directors of pharmacy, and more very critical.
- More hospitals are becoming destination hospitals, serving patients from beyond their immediate geography. That could point to new communication challenges and gaps in care that device and pharma providers can help bridge.
Hear more about the Lowes program from Kaiser Health News and NPR.