Response to Henry Ford Health System: A Different Perspective on Bundled Payments

Posted by Signature Care Management Team on Monday, December 19, 2016 in Blog

A recent article from Becker's Hospital Review provided statements from representatives of Henry Ford Hospital regarding their participation in the Bundled Payment for Care Improvement (BPCI) initiative. They stated that BPCI is “more of a shared savings program” and “the program was not successful because one-third of total services and dollars under the program were controlled outside of the system.” Although bundled payments and shared savings programs have several similarities, BPCI is by definition a retrospective bundled payment, not a shared savings program.

The reason alternative payment models, like bundled payments, exist is because patient care and/or clinical episodes of care need to be better managed; it has never been controllable within one entity or system. These models create incentives for fragmented health systems and providers to collaborate and work together to provide a higher quality of care and lower costs. Although Henry Ford appears to have had a more challenging BPCI experience than others, there are many model 2 participants, such as physician groups, who are thriving in bundled payments for lower joint surgery.

There is a myth in healthcare policy that hospital systems are the only entities capable of managing population health and cost. This myth exists because hospitals appear to have vast influence over patient care and discharge plans. However, in reality, that level of influence remains with physicians. In any bundled payment program, regardless of provider, there is going to be a portion of patient care that will be variable and hard to control or manage.

We convene nearly 60 physician group practices in Model 2 of the BPCI initiative performing lower extremity joint replacements (LEJR). Arguably, these physician group practices have even greater challenges in managing an entire episode of care since physicians only have true control over about six percent of the total cost of a 90 day clinical episode. Although this fact can seem like an insurmountable challenge, it instead has emphasized the critical element for success in bundled payments - care coordination. Along with care coordination, the vast majority of bundled payment clinical episodes can be successfully managed by implementing several essential care redesign strategies, such as:

  • Post-acute provider network development
  • Effective case management
  • Physician engagement and leadership

Physician groups work closely with all care providers across the care continuum for LEJR recovery. Through alignment of post-acute care providers, physicians ensure quality care is provided and meets their discharge recommendations. The key element of care coordination and partner alignment is communication.

Communication of goals, expectations, protocols, patient status, and results. The strategy of working with other facilities means that hospitals or other episode initiators do not need to necessarily “own” all the facilities that are utilized, they just need to have effective strategies to work together. Additionally, while hospitals and physicians cannot force a patient to see a specific provider, physicians have a significant impact on patient choices.

A key strategy in bundled payments is the development of preferred provider networks. Preferred providers are those post-acute care facilities aligned with the episode initiator's BPCI goals, willing to communicate with physicians, meet quality thresholds, and are willing to implement physician-specified care plans. When physicians explain post-acute care options to their patients' and discuss the importance of quality care, we have found the majority of patients choose to utilize preferred providers.

For our physician group practices implementing effective bundled payment strategies, despite much of the LEJR care being outside of our physicians direct control, our groups have reduced episode costs, reduced readmissions, reduced post-acute care utilization, and reduced a number of key performance indicators.

 In our experience, with the right strategies and a team dedicated to bundled payments, success in bundled payments is possible.   Contact us at for more information or assistance in working with bundled payments.


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