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Physicians Offer a Bundle of Opinions

 |  By jcantlupe@healthleadersmedia.com  
   May 30, 2013

Bundled payments are one of the financial models emerging from the evolving healthcare marketplace. But a survey of physicians and hospitals shows a significant divergence of opinions about bundling. Practice size is just one factor.

As healthcare moves quickly toward value-based care, bundling is often depicted as the financial model with the most potential for starry-eyed success, in terms of quality and income. Yet a discordant gap in opinions has emerged, as large hospital and physician groups differ dramatically from smaller groups in their attitudes about bundling.

Bundling advocates see the financing formula as a way to get a handle on skyrocketing costs. Under the bundling initiatives, payments are made for multiple services under what is termed an "episode of care" for the patient. Instead of a surgical procedure generating multiple claims from many providers, the entire team is compensated with a bundled payment, on the premise that such a move would provide incentives for more efficient care.

A bundled savings program provides incentives for providers to share in any savings and can increase physician payments with improved patient outcomes. But while bigger players are wildly enthusiastic, those at the other end of the spectrum see it as more "bumbling" than appealing.

The larger groups are chomping at the bit to launch bundling programs, showing many are more excited about this approach than Accountable Care Organizations or patient-centered medical homes. But smaller entities, while seeing benefits of bundling, express trepidation because of what they deem to be the complexity of the payment plan.

That's the finding of a recent Booz & Co. survey of more than 400 physicians and 150 hospital administrators.

Physicians in large groups are generally enthusiastic about bundles, according to the Booz survey. The data show that doctors in larger, multispecialty groups or employed by a health system are more interested in bundles (59%), compared to single specialty practices, 24%. Moreover, a significant number of single practices doubt the efficacy of bundles (44%), compared to how many multispecialty groups hold that view, 27%.

Booz officials concede some physicians are saying "not so fast," especially when it comes to bundles' quality and experience benefits.

Hospitals both large and small reflect the attitudes of physicians about bundling, the Booz survey shows.

About 30% of hospitals surveyed are "pursuing" the model, and another 51% are "exploring" the idea. Some 53% of large health systems with more than $1 billion in annual revenues are beginning to implement bundles. In addition, nearly 64% of those embarking on bundling reported cost savings.

In contrast, 24% of smaller healthcare systems are implementing bundling programs. About 20% of smaller systems see "little efficacy" in bundling.

Proponents of bundling see it as a major tool for achieving goals of the Affordable Care Act. Nearly all large systems are expected to develop bundles. Consumers, too, have high hopes about bundling, with three-quarters finding the concept appealing, according to the Booz survey. I have written about several bundling projects, that are either finding good outcomes, such as in cardiac care or are still being evaluated in cancer care.

Doctors' uncertainty about bundling, (especially those in small groups) may seem puzzling, but there are complex issues surrounding the payment formula, Sanjay B. Saxena, MD, a partner with Booz & Co., based in Sacramento, and a proponent of the payment model, told me.

For one thing, bundles are difficult to put together. "Design is hard, especially getting the risk- and gain-sharing arrangements right," the survey report notes. "Implementation is no picnic either – with persuading physicians to deliver against the bundles, integrating data and running bundles alongside traditional fee-for-service approaches topping the list of challenges."

"You might say, 'why isn't physicians' support widespread?'" Saxena asked. "It seems like a good thing for everyone—higher quality at lower cost. It makes a lot of sense, right?" Despite that, many physicians are so bogged down with other matters—regulatory reform, electronic medical records, the viability of their practices—that they are just weighed down by the idea of a new payment formula, Saxena says.

Then physicians are told: 'we've got to figure out a new model, it's bundled payment, it's different," Saxena says. Physicians are asking: How are we going to deal with it?

And there are other complications. Some providers believe if they are involved in ACOs, there is no reason to undertake bundling. And vice versa. That's a mistake, a Booz official says. "They link together very well, bundles and an ACO," says Brett Spencer, MD, a principal with Booz based in Chicago and a member of the firm's health practice division. When physicians manage their procedures under bundling, that can produce savings for an ACO overall, he adds.

Of the bundles that have been established, nearly 85% have focused on procedure-based treatments. Only 25% of the respondents said their bundles involve chronic care conditions. As more physicians get used to the bundling approach, they can focus on more service lines, Spencer says.

The Booz report notes the importance of bundling attached to more care delivery approaches. "It is clear, however, that chronic conditions need to receive greater attention going forward," the survey states.

Interestingly, as it cheerleads for bundling, Booz has come up with a mixed bag of data, acknowledging that "larger provider organizations are leading the industry's shift and early results are encouraging." The firm adds: "Smaller entities see similar potential benefits but are cautious in the face of resistance, uncertainty, and complexity."

There's no question in his mind, Spencer says, that more providers will adapt to the bundling model. "It's just a question of when it will happen. The speed of adoption will occur as the comfort level grows with it."

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Joe Cantlupe is a senior editor with HealthLeaders Media Online.
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