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Our Lady of the Lake sets up 'value guarantees,' stops charging for some post-op care

Hospital does not charge for any additional care within 30 days of a hip or knee replacement, covering readmissions, infections and rehab.

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Amid reimbursement upheaval, a sick and uninsured population, Our Lady of the Lake Regional Medical Center in Baton Rouge, Louisiana  is pushing ahead with a number of ambitious plans to align its payment structure more with value than traditional fee-for-service.

The facility recently became the state’s first hospital to offer a guarantee to patients receiving hip and knee replacements and their insurers. Our Lady Regional does not charge for any additional care within 30 days of a hip or knee replacement, covering readmissions, infections, rehab and postoperative care — everything except deficiencies in the joint devices.

The aim is to eliminate the need for or to simply not charge post-surgical follow-up care, said Scott Wester, CEO of the 800-bed teaching hospital, the flagship facility in the Franciscan Missionaries of Our Lady Health System. “We believe enough in our clinical care and our surgeons to offer something like this,” he said.

As part of the program, hip and knee replacement patients are asked to be active participants in care and recovery, and agree to attend pre-operative classes and evaluations. Neither they nor their insurer are asked to pay anything extra, even though certain incidents like surgical site infections could be billed, Wester said.  “We’re not asking for any more reimbursement from any payer; it’s the default.”

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The Our Lady health system includes the regional hospital, a children’s hospital, a 350-physician primary care network, an urgent care clinic network, outpatient imaging and surgery centers, plus a healthcare college. Like others around the country, Our Lady is trying to find its place in new era of health reform. This especially difficult  in Louisiana, a state that is so far not expanding Medicaid eligibility and where residents are among the most likely in the nation to suffer from obesity and diabetes, use tobacco and live without health insurance until they turn 65.

The value guarantee, though, is a way to align the hospital with patients’ best interests and to “reduce variations of care and variation of outliers,” said Wester, who’s spent his whole career at Our Lady. It creates an incentive for the hospital to offer hip and knee replacements to the most appropriate patients, those who can most benefit in the long-term and who are healthy enough to make it through surgery, which bring increased complication risk in patients with multiple chronic conditions.

The total joint replacement guarantee started in January, building off a Medicare pilot Our Lady began last year, and it could be the starting point for more value-based programs, Wester said.

Our Lady Regional is participating in the Centers for Medicare and Medicaid Services’ bundled payment program, for both total joint replacement and coronary bypass surgery. Our Lady’s program is the only bundled payment pilot with both upside and downside potential — that is a risk of losing money along with a possibility quality-based incentive payments, something the system’s physicians embraced.

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“It’s important for people to know that they could potentially lose money.”

As that was getting underway last year, Wester thought about applying that beyond Medicare, to commercially insured patients. “I asked our team, ‘What would happen if we would just guarantee all of those that are involved in our total joint for the hospital to assume risk post-discharge?’”

There is no data yet available on Our Lady’s bundled payment demonstration or the total joint replacement value guarantee, although Wester said that in 2013, the hospital met or exceeded quality benchmarks for total joint replacement.

“It’s been amazing when you see clinicians say, ‘Let’s standardize care. Maybe we don’t need to do as much rehab. Lets standardize the devices we put in, instead of 10 vendors lets use four,’” Wester said. “They sit around and talk and come up with evidence-based practices or agree to their own convictions.”

Some insurers were a little skeptical in the beginning, wondering if there was a catch, Wester said.

“Health plans have a hard time doing bundle payments; their systems aren’t set up for it.”

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Sabrina Heltz, the senior vice president for quality at Blue Cross Blue Shield of Louisiana, said the insurer is studying the impact of Our Lady’s value guarantee closely, and not yet decided on going to a bundled payment. But she believes the hospital’s move is admirable and indicative of the increasing scrutiny patients themselves are applying.

“As a consumer, you expect good outcomes from your provider, you expect no complication rates,” Helz said.

For Our Lady of the Lake, the value guarantee looks promising enough that Wester said the system’s leaders are considering expanding into other clinical areas. “I would like to start another one before the end of the year and another one in 2016 and 2017,” Wester said.

Our Lady of the Lake is also in the midst of an expansion to compete with Louisiana's largest hospital network, Ochsner Health System, Our Lady is undergoing a $23 million renovation of a multidisciplinary oncology center, building a new $180 million Heart and Vascular Institute and plans to build a new children’s hospital. 

Wester said the system is also trying to embark on a business and cultural shift, embracing the move away fee-for-service along with a high-interest in quality and choices.

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“It’s pretty progressive,” Wester said of Our Lady’s programs. “We’re not a Hopkins or Cleveland Clinic, but for Louisiana, we want to be the destination for care.”

The Our Lady health system is also growing its Health Lives wellness program for employers, offering analytics, health risk assessments health coaching, and trying to work around the constraints of the lack of Medicaid eligibility expansion to offer better healthcare options to the uninsured.

In 2013, following the closure of Baton Rouge’s Earl K Long charity care hospital, Our Lady and a number of other providers partnered with the state to receive charity care funding and serve the uninsured through a network of ambulatory care clinics offering urgent care and chronic disease management

“Our goal is to protect the integrity of our community for all of our citizens,” Wester said.

Twitter: @AnthonyBrino

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