Surgery avoidance: A straightforward win for benefits leaders
November 2, 2021
How much care is too much?
When patients are struggling with a medical condition, they’re often willing to do whatever it takes to restore their health. If doctors recommend more tests—or even surgical procedures—patients will generally follow that guidance in hopes that it will lead to positive results.
But they don’t always get those positive results. Because the traditional insurance system is built on a fee-for-service model, providers are reimbursed for quantity, not quality, of care delivered. Rather than feeling empowered to recommend less-invasive treatments, they are financially incentivized to take a hands-on approach, even when it may not be necessary.
While this may seem harmless enough, excessive care can cause long-lasting problems for patients, including complications, hospital readmissions, and chronic issues. And along with the resulting physical and emotional ramifications, unnecessary tests and surgeries come with significant financial costs for self-insured companies footing the bill.
Sizing up unnecessary surgical spend
The Institute of Medicine estimates that $765 billion is wasted in the U.S. healthcare system each year. More than $200 billion can be directly attributed to unnecessary services, such as tests and procedures. This problem has been validated by physicians themselves. In a survey of more than 2,000 doctors from the American Medical Association (AMA), physicians said that roughly 20% of medical care was unnecessary, including 25% of tests and 11% of all procedures.
However, some specialties see more unnecessary procedures than others. Orthopedics are a top driver of excessive surgeries, especially knee, hip, and spinal procedures. One study published in the medical journal Arthritis & Rheumatology found that more than 1 in 3 (34.3%) total knee arthroplasty surgeries were deemed inappropriate. An additional 1 in 5 (21.7%) were deemed inconclusive. Another study in The Journal of Arthroplasty found that the average cost of hospital readmission after a total knee replacement was $38,953. Considering the high number of knee and hip replacements self-insured companies have to pay for each year, these costs add up fast.
Although it’s the leading cause of death in the United States, heart disease also tends to be overtreated. While cardiac stents and bypass surgeries are regularly used to address heart conditions, a federally funded study showed that in some cases medication can be as effective as surgery. However, surgery is far more profitable.
Value-based care prioritizes patient outcomes
Medical providers are continually evolving their approaches to patient care as new research is published and peer reviewed. But even when doctors want to change their approach, the structure of the healthcare system creates roadblocks. Insurance companies micromanage treatment plans and lock providers into payment structures that prioritize quantity of services over quality. Most respondents in the AMA survey said that de-emphasizing fee-for-service physician compensation would help cut down on unnecessary medical care and reduce the cost of healthcare services.
Enter an alternative approach: value-based care. This healthcare model is built on the concept that healthcare providers should be reimbursed based on the quality of care they provide, not just the volume of services they deliver. Doctors are rewarded based on patient health outcomes, which helps ensure more appropriate care.
A new standard for Centers of Excellence
Traditional surgical Centers of Excellence (COE) programs represent millions of employees, giving them significant negotiating power that individual employers simply don’t have. This helps drive down surgery prices, but COE solutions that take a value-based approach go a step further to ensure employees are receiving the care that’s right for them.
By partnering with the right value-based COE program, companies can avoid nearly one-third of unnecessary surgeries. Fewer unnecessary surgeries combined with lower unit costs is the holy grail of cost containment for employers—and avoiding surgeries in favor of alternative treatment options indicates employees are being treated in a way that puts their overall health and well-being first.
When surgery is the most appropriate course of treatment, true value-based COE solutions also ask providers to guarantee their patient outcomes by agreeing to cover all costs associated with complications, such as readmissions, for 30 days or more. This adds a layer of accountability that can lead to up to 86% fewer readmissions. Fewer complications are a win-win, resulting in lower costs for employers and shorter recovery times for employees.
Plus, the best programs negotiate bundled rates with the top surgeons in the nation. They connect companies with providers who have been strictly vetted based on specific quality metrics and offer flat rates for end-to-end care associated with specific procedures and some of the highest-cost conditions.
When doctors are empowered to prescribe the most appropriate form of care—whether that means surgery or not—everyone benefits. Partnering with the right value-based COE puts employee well-being front-and-center—and reins in excessive healthcare costs that hurt a company’s bottom line.
To learn more about value-based COEs and how to find the right one, download Carrum’s e-book, It’s Time to Fix Your Surgical Spend Problem: How a Better COE Benefit Can Cut Your Costs in Half