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Editor’s Spotlight/Take 5—2018 John Charnley Award

Analysis of US Hip Replacement Bundled Payments

Physician-initiated Episodes Outperform Hospital-initiated Episodes

Manner, Paul A., MD, FRCSC

Clinical Orthopaedics and Related Research®: February 2019 - Volume 477 - Issue 2 - p 268–270
doi: 10.1097/CORR.0000000000000626

P. A. Manner Senior Editor, Clinical Orthopaedics and Related Research®, Philadelphia, PA, USA

P. A. Manner MD, FRCSC Clinical Orthopaedics and Related Research® 1600 Spruce Street Philadelphia, PA, 19013 USA Email:

A note from the Editor-In-Chief: In “Editor’s Spotlight,” one of our editors provides brief commentary on a paper we believe is especially important and worthy of general interest. Following the explanation of our choice, we present “Take Five,” in which the editor goes behind the discovery with a one-on-one interview with an author of the article featured in “Editor’s Spotlight.”

The author certifies that neither he, nor any members of his immediate family, have any commercial associations (such as consultancies, stock ownership, equity interest, patent/licensing arrangements, etc.) that might pose a conflict of interest in connection with the submitted article.

All ICMJE Conflict of Interest Forms for authors and editors and board members are on file with the publication and can be viewed on request.

The opinions expressed are those of the writers, and do not reflect the opinion or policy of CORR® or the Association of Bone and Joint Surgeons®.

This comment refers to the article available at: DOI: 10.1097/CORR.0000000000000532.

Bundled care represents the latest in a long series of attempts to control costs and improve quality in the United States. In a bundle, a hospital or provider group assumes clinical and financial responsibility for the treatment given to a patient in a defined episode of care. Total joint arthroplasty is considered particularly well-suited for this approach—it is commonly performed, expensive, and fairly predictable in terms of quality outcomes and cost. Our Journal has published a number of studies and commentaries on this topic since the Centers for Medicare & Medicaid Services (CMS) initiated the Bundled Payment for Care Improvement (BPCI) program in 2013 [2, 3, 8]. Typical findings include cost reduction with no impact on measures of quality such as readmission, morbidity, or patient reporting; the most-important cost measures often include avoiding institutionalized postacute care and reducing length of stay.

The arthroplasty programs and groups that have succeeded in reducing cost show two consistent themes: Sustained “buy in” from involved surgeons and willingness to change preoperative practices, perioperative measures, and increasing the frequency of planned discharge to home so as to avoid expensive postacute care [4, 6]. When Tessier and colleagues [13] compared orthopaedic groups with and without defined postacute care pathways, for example, they found that those with explicit pathways provided the same level of care, but the cost was USD 3200 and USD 2400 less for total hips and knees, respectively.

Unfortunately, reorganizing care is time consuming and requires deep pockets. Althausen and Mead [1] noted that preparing their 19-surgeon group for BPCI required more than USD 200,000 in personnel, administrative time, waivers, software, and ancillary costs. And asking organizations or hospitals (which often are run by nonclinicians) to provide resources and money without promise of a return on those investments is unrealistic.

So who is better at controlling costs, physicians or executives? In this month’s Editor’s Spotlight, which also is this year’s John Charnley Award-winning study [10], Stephen B. Murphy MD and his group compared the costs and quality of BPCI episodes initiated by hospitals to those initiated by physician group practices (PGPs), and found that the PGPs were better at keeping costs down. This is not an isolated finding. Robinson and Miller [12] found that hospital-owned physician organizations in California incurred higher costs for commercial HMO enrollees for all services than physician-owned organizations, even after correcting for patient disease burden. Similarly, prostate cancer patients aligned with accountable care organizations (ACOs) had similar rates of treatment, but increased spending, compared to patients who were not. The mean difference was not great, at about USD 1200, but certainly calls into question the concept of the ACO as a cure-all [7].

What makes the current study particularly powerful, and of general interest to all of our readers, is that Murphy and colleagues examined data for the entire country, with results that are both clinically important and statistically robust. Join me as I go behind the discovery with Dr. Murphy in the following “Take 5” interview.

Take Five Interview with Stephen B. Murphy, senior author of “Analysis of US Hip Replacement Bundled Payments: Physician-initiated Episodes Outperform Hospital-initiated Episodes”

Paul Manner MD, FRCSC: You have shown a small improvement in risk for postoperative complications, as measured by readmissions or mortality within the first 90 days [10] . Can you explain this more fully? Are we providing better care, being more organized with protocols, or is this a case of cherry-picking?

Stephen B. Murphy MD: The capability of measuring readmission and mortality on a nationwide basis in Medicare patients is quite new. In the case of bundled payments, all stakeholders have new motivations, not just for patients to do well, but to provide efficient care, too. Our study showed that the physician groups were not systematically cherry-picking at all. This was true improvement.

Dr. Manner: In your study, the major contributor to variation in cost of knee and hip arthroplasty was postacute care. While prior studies have differed in terms of the magnitude of this finding, this has been observed before [3, 11] . What seems really new here is how much better physicians were compared to hospitals. Why were physician groups better at keeping patients out of expensive facilities?

Dr. Murphy: The surgeons have a direct face-to-face relationship with a patient, often over a sustained period of time. They also have direct responsibility. This is in great contrast to hospital systems, which may have a 24- or 48-hour relationship with the patient and no face-to-face interaction between the leading party in the bundle and the patient. Generally, the person responsible in the hospital system has no clinical training. Surgeons know what’s important and what’s not. In Comprehensive Care for Joint Replacement for example, CMS may interact with hospital systems instead of surgeons just because it is easier, but it certainly isn’t better.

Dr. Manner: We’ve seen several publications [4, 6, 13] that show modest but real decreases in declared cost. Much of this results from streamlining discharge planning and avoiding high-cost interventions of uncertain benefit. But there’s a certain point where the median cost simply can’t go any lower. Where do you see that point?

Dr. Murphy: The cost of joint replacement has been decreasing steadily for several years now (in the CMS population) even without comprehensive management. With respect to joint replacement specifically, the improvement opportunities have already leveled off. The new BPCI-Advanced program represents a challenging situation because assumptions of continued linear decreases in cost are not consistent with current reality.

Dr. Manner: As you note, participation in BPCI is voluntary. Might this be a situation where those physician groups who already have organized efficient programs are more willing to enter risk/reward programs? Where do you see bundled care going in the future? Does it have a future?

Dr. Murphy: The first BPCI was a little simpler in that all patients had the same target price for the same diagnosis-related group and there were larger opportunities for improvement. BPCI-Advanced is more challenging in that each patient has a different target price based partly on comorbidities and on things like whether the secondary insurance is also a government-funded one. The new fact that short-stay total knee replacements now no longer even initiate an episode is quite challenging since now the fastest recovering patients are no longer available to balance out the challenging episodes.

It is striking that all the 400,000 plus primary THR DRG 470 episodes over the 3.5-year period in the US cost only USD 7.1 billion in Part A expenditure. All of this effort to save a few percent contrasts to CMS not approving outpatient total joint replacement which could save 40% immediately for appropriate patients without the need for a central program, just allowing the free-market to lower costs and improve outcomes. So bundled care management may be here to stay, but its influence on patients who undergo joint replacement will become progressively limited compared to alternatives.

Dr. Manner: We’re all seeing more administrators and nonclinical personnel in our hospitals [5, 9] , and I’m not sure how to explain your findings. What message should I give to them?

Dr. Murphy: Simplified care is the best care. Ever-increasing populations of people involved in patient care who never see our patients or have true responsibility for our patients is a challenging trend. Since increasing management costs will soon far exceed the savings, being extremely careful about adding “care-management services” is very important. Overadministration of programs should be avoided.

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