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Shopping Tips to Save Hospitals Money

Karen Minich-Pourshadi, for HealthLeaders Media, November 26, 2012

Get the price right. Healthcare reform is here to stay and bundled contracts are a part of the future, although this payment model is still in its infancy.

21st Century Oncology, which provides cancer care services in 16 states and seven countries and has a network of over 250 facilities, began testing bundled payments when its leaders foresaw changes in healthcare reimbursement. "For over two years, 21st Century has felt that the payment model is going to evolve. We've been working with CMS closely to pilot this [type of payment model] in the Medicare space; we had those discussions going prior to reaching a commercial agreement," said Kurt Janavitz, senior vice president of managed care and network development.

"Rather than have this [payment] model thrust upon us and have to react to it, we decided to take a leadership position to gain the experience with it, and to use it as a differentiator for payer groups wanting to use it," Janavitz told HealthLeaders Media.

To arrive at a fair bundled price for its procedures, 21st Century Oncology had to review costs and provider utilization levels and then benchmark each organization regionally and nationally to look for possible savings in anticipation of a bundled contract.

"We're experts for treatment, so we said we should come up with the right overall [payment] rate, and then that gets the nonsense out of the process of delivering care to the patient. The cash flow is up-front as opposed to claim-by-claim. We decided to do this as a national case rate contract as opposed to doing a different contract for each of Humana's individual markets," explained Janavitz.

'Tis the season for shopping and giving, and in that spirit, CFOs should aim to give their organizations a lasting gift: a strong bottom line.


Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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