The Pennsylvania health group that's betting on standardizing practices to improve care, and winning
No frequent buyer card or Foursquare mayorship can make up for the distress of having to return to the hospital to treat chains of complications after what was supposed to be a one-time medical procedure. It's not that hospitals actually offer such perks, but it's an acknowledged problem that medical errors and complications make it easy for patients with acute diagnoses to become returning customers.
In February 2006, Geisinger Health Group of central Pennsylvania launched ProvenCare, an experiment that gave its three hospitals an incentive to get it right the first time. Patients admitted for elective heart bypass surgery were charged -- via their Geisinger insurers -- one flat rate, which covered the costs of up to 90 days of follow-up admissions and procedures.
As The New York Times reported a year in, it was "noteworthy as a distinct departure from the typical medical reimbursement system in this country, under which doctors and hospitals are paid mainly for delivering more care -- not necessarily better care."
Geisinger was placing a bet that they could provide care for cheaper than the amount for which they billed the insurance company, calculated as the initial cost of the procedure plus 50 percent of the historical cost of follow-up for the three month period. It meant the hospitals would be taking on all of the uncertainty; to justify such considerable risk, they needed to be reasonably sure that they could get their patients in and out for less than the cost they were charging. And so while the idea of attaching a warranty to heart surgery was certainly new, the real innovation was in their overhaul of the surgical procedure itself, which had to bring about enough of an improvement to translate into reduced costs through reduced errors and complications.