April 23: Doctors experiment with a single price, single bill for surgery

  • Article by: JACKIE CROSBY , Star Tribune
  • Updated: August 10, 2013 - 10:11 PM

So-called “bundled” procedures are gaining popularity here and nationally.


Physical therapist Brandon Schomberg supervised as Dr. Richard Golden worked out at Twin Cities Orthopedics in Edina. Golden got a right-knee replacement on Jan 15.

Photo: BRUCE BISPING • bbisping@startribune.com ,

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Dr. Richard Golden describes himself as an “avid but poor athlete.” His bum knee, however, was making it too painful to jog, downhill ski or play golf.

This winter, the 62-year-old Excelsior resident decided to stop putting off surgery and signed up for a new program through Twin Cities Orthopedics that aims to make getting a new knee as uncomplicated as buying a carton of milk.

Golden was quoted an upfront price of $21,000 that covered the entire operation — including surgery, medication, post-op recovery and unlimited physical therapy appointments. And it came on a single bill he could submit to his insurance company.

“This is the way to go,” said Golden, a neurologist who knows how complicated the medical system can be. “It’s like getting an all-inclusive vacation where they think of everything.”

The Affordable Care Act is spurring a host of efforts to make health care more patient-friendly and less costly, and the pay-one-price approach is among them. After decades of discussions and small-scale tests, the federal government in February launched a nationwide pilot with 450 health care organizations to see if bundling payments for a “single episode of care” could help transform a system in which doctors have long been paid for each discrete encounter with patients.

Minnetonka-based UnitedHealthcare is involved in a bundled-price pilot for cancer treatment, while other hospitals and insurers around the country are focused on such ailments as diabetes, heart disease or pneumonia.

“This is just the beginning,” said Rajeev Kapoor, a partner in the health practice at global management consulting firm A.T. Kearney. “We will see many more of these programs across the nation.”

An integrated approach

Total knee replacement surgery has emerged as a frequent candidate for package pricing because it’s a common procedure with wide variation in costs.

Wisconsin has launched a three-year bundled care pilot project to study hundreds of knee replacement surgeries at nine hospitals in seven health care systems. The Mayo Clinic in Jacksonville, Fla., launched its first bundled payment for knees in December in partnership with Blue Cross Blue Shield of Florida.

The key to making bundled payments work is control over as much of patient care as possible from start to finish.

Twin Cities Orthopedics, a doctor-owned practice, takes all of the risk of covering the procedure, CEO Troy Simonson said. “We’ve won some and we’ve lost some, too.”

A team of on-staff nurses and a nurse practitioner counsels patients before surgery and cares for them afterward. Twin Cities Orthopedics handles the lab work and the medications, and performs the surgery at an outpatient clinic, which takes much of the guesswork out of anticipating the cost of the medical staff and keeping the lights on.

Instead of a costly hospital stay, Twin Cities Orthopedics sends patients to an apartment a block away at York Gardens, an assisted-living facility in Edina. Surgeons make daily rounds, nurses provide round-the-clock care and a physical therapist gets patients moving within hours of surgery.

“We have ownership of all aspects,” said Justina Lehman-Lane, a doctor of nursing practice who was hired to develop and oversee the program for Twin Cities Orthopedics. She makes sure every patient has her cellphone number. “We’re like the small-town clinic.”

But the program is limited to people who don’t have other serious medical issues that might require a hospital stay. And it isn’t covered by Medicare, because the federal health care program for seniors only covers hospital stays. Since June, when the bundled-care Excel program launched, just 21 patients have gone through it.

Still, the program appears to be delivering. The $21,000 sticker price is about 30 percent less than what insurance companies in the Twin Cities pay for a typical knee replacement, Simonson said, and in line with what Medicare pays over the course of six months.

“It’s where health care should go,” he said. “Patients love it. We give full disclosure on the price, and they’re only dealing with us as far as the billing goes, not hearing from six or seven different entities.”

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