While few hospitals have tried bundled payments so far, hundreds are expected to participate in the new bundling program that the Centers for Medicare & Medicaid Services (CMS) launched in August. A CIO at one healthcare system that plans to enroll in this program spoke at the CHIME Fall CIO Forum in San Antonio about his past bundled payment endeavors, and what he expects will happen going forward.
Gary Davis, CIO of Baptist Health System, which includes five hospitals in San Antonio, told attendees about his organization's experience in an earlier Medicare demonstration of bundled payments. Known as the Acute Care Episode (ACE) project, Baptist was required to pay physicians fee-for-service, but allowed gainsharing bonuses. The system offered monthly bonuses to participating doctors if they met quality criteria, with 78 percent of the doctors receiving such bonuses.
In the first 14 months of ACE, Davis said, the system saved $2.2 million, mainly on expensive surgical supplies such as implants. Besides getting bonuses, the doctors also received their Medicare payments faster--a big incentive to many.
From the hospital perspective, Davis noted, the bundled payment program created stronger ties between the system and the doctors, as well as improvements in core measures and reduced lengths of stay. The new bundling initiative could also help Baptist prevent readmissions, he said.
At the time of the demonstration, the Baptist hospitals did not have computerized physician order entry, Davis noted. Their medical staffs implemented paper order sets that helped reduce variations in care and enabled case managers to follow up on test orders. Today, Baptist is rolling out CPOE across its hospitals, and Davis believes that will be vital to success in the new CMS bundling program.
Cost accounting is another critical tool for coping with bundled payments, Davis said. Baptist lacked a cost accounting system when it undertook ACE, which made it difficult to research the organization's historical costs and explain the doctors' costs to them.
Baptist had to develop a data warehouse to integrate supply cost and patient accounting data with clinical quality data, Davis said. The complexity of paying physicians in the bundled payment scenario also added extra work to the finance and accounting departments. He expects that the system will have to hire some extra people across various departments for the new bundling program.
Nevertheless, Davis is enthusiastic about the potential of bundled payments, and he said the Baptist board feels the same way.