RAND Corporation Study Proves Bundled Payments Produce Significant Savings for Employers Using Carrum Health
March 1, 2021
Centers of Excellence Platform Guides Patients to Bundled Surgery and High-Quality Care from Leading Providers, Significantly Cutting Employer Costs While Improving Outcomes
SAN FRANCISCO – March 1, 2021 – In a first-of-its-kind study of bundled payments for commercially insured populations, RAND Corporation highlights the significant financial savings that can be achieved through Carrum Health‘s digital Centers of Excellence (COE) platform. The study, published today in Health Affairs, the leading peer-reviewed journal of health policy thought and research, highlighted a more than 45% per procedure savings when procedures were performed through Carrum Health.
Overall, employers achieved an 11% medical cost reduction after implementing Carrum Health across all covered procedures, including those not performed through the Carrum Health benefit. Patients also saved money as cost-sharing payments were waived for the 21% of patients who went through the program.
“While there is much empirical data on the impact of bundled healthcare for Medicare populations, not as much was known about the impact of these offerings on commercially insured populations,” said Christopher M. Whaley, Ph.D., healthcare policy researcher for RAND Corporation and author of the study. “Our analysis of Carrum Health’s market-leading COE platform shows that both employers and patients can see immediate and significant savings on completed surgeries, while getting high-quality care from the top hospitals around the country.”
Carrum Health, the first digital health company connecting employers and employees to COEs through a technology-powered platform, is transforming the way healthcare is paid for and delivered. Carrum Health develops comprehensive bundled payment arrangements with the top providers in the country and directly contracts with them for common, high-cost surgeries. Then through its COE platform, employers can purchase healthcare directly from these providers for a single, transparent price and offer personalized, one-on-one support to patients throughout their care journey. Carrum Health recently announced expansion of its bundled payment offerings into cancer treatment.
RAND Study Methodology and Results
To understand the impact of bundled healthcare for self-funded employers, RAND analyzed medical claims data from eight Carrum Health clients with 1,000 to 100,000 employees, across both private and public sector customers, as well as regional and national customers. The study evaluated two years of medical claims data prior to implementation of Carrum Health, as well as afterwards, between 2016 and 2020. The medical claims data was for all health services – including surgeries not accessed through the Carrum Health bundled offering.
A total of 2,372 surgeries were included in the study, with a focus on three surgery types: total joint replacement, spinal fusion, and bariatric weight loss surgery. The study confirmed an average savings of $16,144 per procedure when the surgery was performed through the Carrum program.
In addition, before Carrum Health, patients were responsible for out-of-pocket costs, co-pays and deductibles ranging from $998 to $2,387 for their surgery. However, by using Carrum Health’s bundled offering, patients paid nothing.
Bundled Offerings Increase Cost Savings, Avoid Surgeries, and Reduce Readmissions
In addition to cost savings, Carrum Health is able to achieve extraordinary health outcomes. In the studied population, 30% of members who were initially recommended surgery were later redirected to less invasive treatment options. The RAND research did not quantify savings from avoided surgeries, highlighting that the actual cost savings realized by employers through the Carrum Health program is significantly higher. Additionally, Carrum Health’s program reduces readmissions, another key quality metric, by 74% to 86% relative to the national average.
“We launched Carrum Health to catalyze the transition of the healthcare payment model from the inefficient fee-for-service system to value-based care, leveraging bundled payments. Bundled payments are a powerful vehicle that align incentives across purchasers, members and providers, reduce costs and improve health outcomes,” said Sach Jain, CEO and founder of Carrum Health. “RAND’s analysis of bundled payments using Carrum Health’s data validates that, when done right, bundled offerings definitively reduce medical spending while still delivering excellent outcomes.”
About Carrum Health
Carrum Health was founded in 2014 with a mission to “bring common sense to healthcare” through a value-based healthcare model that benefits families, employers and providers. Headquartered in South San Francisco, Carrum’s award-winning surgery benefits platform connects self-insured employers with top providers under standardized bundled payment arrangements to better manage healthcare costs. By aligning provider incentives with quality performance, Carrum drives improvements in patient experience and health outcomes. Customers include large Fortune 500 companies and public sector organizations. For more information, visit carrumhealth.com.
About the RAND Corporation
The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous.