How Bundled Payments Change Reimbursement Landscape Jeff Peters CEO, Surgical Directions

Agenda How the business of perioperative services is changing Why bundles are here to stay Will bundles change under the new administration How reimbursement changes under bundles How should perioperative services be organized How the role of the OR Business Manager is evolving Case Study New Hanover

Bundled Payment Covers the Entire Episode of Care

Hospitals Survival in New Value Based Payment Environment Bundled Payments Politically Agnostic Essential Competency Hospitals Survival in New Value Based Payment Environment

Accountable Care Act VS. Repeal ACA Repeal Increased covered populated Decreased reimbursement Decreased covered populated Not Recovering Decline in reimbursement

“We can’t solve the problems of healthcare with incremental add-on solutions, we have to change the very structure of how we deliver and think about healthcare” ASA National Meeting 2016— Michael Porter PhD

Adapting Perioperative Services to a Value Based Model Cost Outcome Value

Value Based Payments Now 26% of hospital patients are currently in value based payments Commercial carriers are moving to bundles Humana Tennessee Healthleaders 5/18/2017

Never Has the Role of OR Business Manager Been More Important Manage Infrastructure for Entire Surgical Episode (100 days post surgery) Educate Organization on New Paradigm Identify Key Success Factors Provide Information Provide Support

Key Pillars for Success Under Bundles Multidisciplinary Steering Committee Daily Huddle Governance Physician Leadership Resources Commitment Cost Quality Patient Satisfaction Surgeon Score Cards Information PAT ERAs Clinical Pathway Post Discharge Clinical Redesign

Perioperative Organization Needs to Change OR Director Duties & Details Historical Under Value Based Payment Span of Control Scheduling PAT OR PACU Surgical Floor SICU Title OR Director VP of Surgical Services

Keys to Success Surgeon Education Metrics Physician Leadership P.I.T. Anesthesia Information Case Time

New Hanover Medical Center Case Study Goal Create strategic alignment between Orthopedic & Colorectal Surgeons Become provider of choice for Orthopedic surgeons and their patients Strategy Surgical Home Co-Management Agreement

Surgical Home Steering Committee Member: Surgeon Anesthesia Nursing Responsibility: Clinical Metrics Dashboard Monitor Drive Change Address Issues Organizational Qualitative Redesign Consensus Goals

Case Volumes – Total Joint Program

Patient Satisfaction

First Case On-Time Starts (FCOTS)

Supply Costs

Length of Stay

All Payor Readmission Rate

Discharge Disposition

Transfusions

Bundled Payment Models Demand Standardization to Be Successful Total Knee Replacement Benchmark* Provider A Provider B Volume 21,966 516 236 Mortality 0.10% 0.00% 0.42% 30 Day Readmissions 3.65% 3.11% 9.79% Complications 10.69% 7.36% 15.25% LOS 3.24 2.75 3.86 Direct Cost per Case $12,041 $11,899 $14,038 Patient Satisfaction Top Decile 92% 86% *Premier Data Set Top Decile When there is large variation in cost and outcomes, organizations are not prepared to offer competitive pricing for bundled payment or take on the financial risk of managing the health outcome of a community

Total Joint Replacement Colorectal (Open & Lap) Results Total Joint Replacement Colorectal (Open & Lap) Baseline – FY ’14 Current – Nov ‘15 – Oct ’16 FY ’15 Nov ‘15 – Jan ‘16 Volume 2,180 2,260 50 10 Mortality 0.27% 0% 2.42% Complication 9.99% 6.77% 17.11% Readmission 5.25% 2.13% 13.56% Patient Satisfaction* 78% tile 89% tile 12% tile Under Review LOS 3.34 2.13 7.51 2.5 Cost per Case $12,163 $10,064 $10,219 *Communication with Doctors Source: Premier Items in red are higher than Premier Benchmark Total Joints 2,735 Additional patient days available Joint Readmissions now in line with Medicare penalty threshold Cost per case reduction of $2,099 equates to $4,743,740 in savings Colorectal Based on the provider participating, 50 additional patient days available

Growth in Orthopedic Volume Increased Financial Performance Outcome Growth in Orthopedic Volume Increased Financial Performance

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