Cleveland Clinic's bundled payment plan draws out-of-state patients

The Cleveland Clinic's decision to accept bundled payments for complex procedures not only attracts surgical patients from out of state, it's led other providers to do the same, according to Bloomberg News. 

Large employers like hardware retail giant Lowe's will have their employees travel from other parts of the country to undergo heart and other surgeries at the Cleveland Clinic, which offers lower prices under a bundled system and overall expertise in healthcare delivery. according to the publication. Lowe's, which has more than 160,000 employees, also pays for travel expenses for patients and their families and will waive co-payments in order to encourage workers to use the Cleveland Clinic.

Other well-known acute care providers, such as Johns Hopkins in Baltimore, now emulates the practice. 

"It's new volume that we wouldn't have otherwise, which means new revenue for us," Trisha Frick, assistant director of managed-care contracting at Johns Hopkins, told Bloomberg. "It also gives us predictability in reimbursement rates."

Academic research  supports bundled payments. Paul D. Ginsburg of the Center for Studying Health System Change argues that patients need incentives to enroll in accountable care organizations or in other programs that help cut costs.

Other large self-insured employers, such as Wal-Mart, also seek providers that offer lower costs via bundled payments. It has an arrangement in place with several hospitals, including the Cleveland Clinic, Geisinger Medical Center in Danville, Pa., Mayo Clinic sites in Minnesota, Arizona and Florida, Mercy Hospital Springfield in Springfield, Mo., and Virginia Mason Medical Center in Seattle.

"We weren't looking for a low-cost provider. We identified high-quality providers and then developed a bundled payment to cover the entire episode," Wal-Mart spokesperson Randy Hargrove told Bloomberg.

However, such arrangements still do not provide enormous revenue streams. For the Cleveland Clinic, it provided about $1 million in 2011, the last year for which data was available.

To learn more:
- read the Bloomberg News article