|WHAT WE’RE READING
Stuff we read this week that made us think.
New data on Walmart’s “Centers of Excellence” program
The venerable Harvard Business Review launched a five-part series on transforming healthcare this week, and we found the first installment to be quite interesting. It discusses the results of Walmart’s Centers of Excellence (COE) bundled payment program, and was jointly authored by the head of that program, a neurosurgeon at Danville, PA-based Geisinger Health (which participates in the program), and the third-party benefits administrator that designed and helps run it. Since 2013, Walmart has contracted directly with a handful of leading national health systems—Geisinger, Mayo Clinic, Virginia Mason, and others—to provide services for its employees across a growing number of high-cost clinical areas: heart surgery; spine surgery; hip and knee replacement; certain cancer evaluations; and bariatric surgery. (At the same time, Walmart has been contracting locally with health systems in accountable care arrangements to provide broader care management services.) The goal of the COE program is to address the wide variability in cost and quality of care Walmart pays for at a local level. (That variability can be worrying: in one example cited by the article, an employee with tremors and neck pain was diagnosed with spinal stenosis and recommended locally for surgery; upon being referred to Geisinger the patient was quickly diagnosed with Parkinson’s disease.) Under the COE program, Walmart picks up the tab for travel and all out-of-pocket expenses for employees to be treated at participating medical centers. It negotiates a discounted bundled rate (ranging from 10-15 percent off total fee-for-service rates) for all services related to the care episode, in exchange for the promise of increased case volumes for its network partners. According to the article, more than 5,000 employees (out of Walmart’s more than 1.5M US employees) have participated in the “travel program”, and the company believes results are encouraging.
Most interesting are the details on program design and outcomes shared by the article’s authors. For example, of the 2,300 employees who participated in the spine surgery travel program between 2015 and 2018, more than half were “guided into other forms of treatment” by the COE network provider, although only half of employees eligible for the spine program actually participated. (This confirms what we’ve heard from participating health systems, who have seen relatively little increase in surgical volumes to date from participating in the program.) Those patients who did end up getting spine surgery experienced shorter hospital stays, had dramatically lower readmission rates, and returned to work weeks earlier than those who did not participate. Although the per-patient cost was higher for spine surgery COE participants, overall the company saved money. But despite these strong results, only 18 percent of eligible joint replacement candidates elected to use the travel program between 2015 and 2018, and only 20 percent of those were steered away from surgery.
As a result, Walmart has begun to enforce COE network integrity: employees electing to receive spine surgery outside the program must now bear 100 percent of the total cost of care, and those receiving non-COE joint surgery are now liable for 50 percent of the total amount. The company has seen a dramatic increase in the number of program participants since implementing the high-dollar cost sharing requirements. We’d expect Walmart-style direct contracting programs to increase in popularity over the coming years, as employers continue to grapple with the high cost of care. Walmart’s COE program is a combination of a narrow-network and second-opinion approach to reducing cost, built around a collection of highly-regarded clinical brands, and now supported by large incentives for employees to stay in-network. It will be worth tracking other large employers as they seek out similar relationships with market-leading medical centers.
A public warning about a popular (and pricey) technology
A recent safety warning from the Food and Drug Administration (FDA) was the subject of an article in the New York Times this week. The warning concerns the use of robotic surgery for treating cancer patients, and advises that the there is no evidence that the surgical technique results in greater longevity for patients, citing some evidence that women with cervical cancer may actually experience worse outcomes when their cancer surgeries are performed robotically. Although the FDA first allowed the sale of robotic surgery equipment using its 501k, or “premarket notification” process, it has never approved the device for cancer prevention or treatment, nor for radical mastectomy, which has recently become a prominent use case among cancer surgeons. The FDA’s assistant director for women’s health in its Center for Devices and Radiological Health, commenting on the new warning, said, “We want doctors and patients to be aware of the lack of evidence of safety and effectiveness for these uses, so they can make better informed decisions about their cancer treatment and care.” The FDA pointed to two recent studies, one examining the efficacy of minimally-invasive versus abdominal radical hysterectomy for treating cervical cancer, and the other comparing survival rates for women who underwent minimally-invasive hysterectomy to those who had traditional open-field surgery to treat their cervical cancer. Both studies raised serious questions about the robotically-assisted surgeries.
The FDA warning highlights a key tension between the desire of surgeons and hospitals to adopt robotic surgery techniques that allow them to attract patients by promising less-invasive procedures, reduced complications and shorter recovery times, and the scientific evidence for the efficacy of those techniques, which has been mixed at best. In particular, the warning calls attention to “off-label” uses of the technology, which the agency initially approved as a surgical tool, not a cancer-treatment device. The FDA gives wide latitude to doctors to determine the appropriateness of off-label uses, which has left the door open to specialists’ attempts to broaden the application of the robotic-assisted techniques. Indeed, across the past decade we have witnessed a veritable arms race among hospitals, who have purchased the robots in an attempt to attract surgeons and the profitable business they bring, forcing competitors to keep pace by investing in their own robotic surgery programs. This has fueled the rise of a multi-billion dollar industry, and the high costs of the equipment have gotten baked into higher prices paid by insurers and consumers for care. Surely there is great promise in the ability of surgery robots to enable safer, less-invasive procedures, but with mixed clinical results and the latest warning from the FDA, greater scrutiny of the use of this expensive approach may be warranted.
Comparing outcomes for home health and skilled nursing
Despite the growing use of both skilled nursing facilities (SNFs) and home health across the past two decades, there has been surprisingly little research comparing which might be better for patients. Writing in JAMA this week, researchers published the first large-scale evaluation of the two settings, comparing outcomes for more than 17M Medicare patients discharged to SNFs and home health from 2010 to 2016. Quality, as measured by 30-day mortality and patient functional status, was equivalent. But patients discharged to home health had 30-day readmissions rates that were 5.6 percent higher than patients discharged to SNFs, although costs of home health care were substantially lower, saving Medicare over $4,500 per patient in the two months after discharge. Researchers noted that the costs of higher home health readmissions did not outweigh the savings: “Readmissions certainly are costs but the lower rates of readmissions (at SNFs) didn’t make up for the higher cost of sending patients to SNFs.”
This study provides lessons for providers who are looking to move more care into the home setting. SNFs likely have lower rates of readmissions due to their higher level of care and 24-hour monitoring. The best home care solutions should incorporate some of the additional capabilities available in SNFs, augmented by telemonitoring, particularly for patients with comorbidities or social needs. Hospital-at-home programs, growing in adoption among health systems, could strike the balance. Given equivalent outcomes across care settings, the study also provides strong support for payment changes that expand reimbursement for additional home health capabilities and (finally) cover hospital-at-home care.