To Bundle or Not to Bundle?

HealthLeaders Media Staff, April 6, 2009

That's not the question, at least according to an admittedly unscientific survey of CEOs and CFOs I've talked with over the past few weeks—ever since President Obama made so-called "bundled" payments a centerpiece of his work-in-progress healthcare reform effort. Why this tortured reference to Shakespeare's Hamlet?

Well, because the question has largely been answered. At least many of your peers think so. If you haven't heard about bundling by now, you'd better spend some time investigating what it might mean for your organization. I try not to tend toward hyperbole in these columns, and I hope I haven't here, but based on what I'm hearing, bundling could transform the healthcare system into something you might not recognize over the next decade or so, should government and commercial payers succeed in their attempts to get it adopted.

If a hot-off-the-press study from the New England Journal of Medicine is to be believed, bundling would be not only a positive step forward to improving the cost and quality of healthcare in this country, but also it would be the best, biggest bang for the healthcare buck. Bundling means that instead of the government or commercial payers paying simply for procedures that hospitals perform on patients, as in the current regime, part of hospitals' payment would be based on how well the patient does in follow-up care. In other words, if a hospital treats a patient for a condition that requires re-hospitalization within a specified time period (the current thinking is about 30 days) then the hospital would eat the cost of treating the patient the second time. That scenario is overly simplified, but gets to the gist of what the president is proposing as one of the pillars of his healthcare reform agenda.

What I'm surprised about is that you don't hear a lot of public grumbling from hospital leaders on this proposal. As I mentioned, many of you have resigned yourselves that some kind of bundling system is inevitable. What it might mean in practical terms is new contractual relationships with a variety of hospital business associates who will help coordinate post-acute care, from rehab centers to disease management companies. Why? Because in many ways, a return to a modified integrated delivery system will be difficult if not impossible for the majority of hospitals.

The tricky part in such a contractual arrangement will be figuring who's responsible for what if a patient does have to be readmitted for the same medical condition before the 30-day period is up. The devil is in the details. Do you have the wherewithal to protect your income if the patient still needs readmission even though your hospital has done everything correctly?

I see a future where a lot of this might be determined contractually, but certainly there will be many instances where the contract might be unclear about who's responsible for eating the treatment costs and how much each party should take the hit for poor quality or for plain old bad luck. I could see many cases sent to independent arbitrators, who might or might not have the knowledge necessary to determine who's at fault. It's a minefield.

So maybe I'm asking the wrong question in my headline above. When it comes to bundling, perhaps it's not "to be or not to be," but "to me or not to me."

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