We are always on the lookout for new business models in health care that have the possibility of shaking up the system, and recentering the focus on the patient. Health care in particular struggles with new business models, as the status quo model is so complex, intertwined, and fragmented.
Geisinger, a hospital system in central Pennsylvania, has been running a unique experiment for a year, and just presented their first results to the larger medical community. Borrowing a lesson from other consumer products and services, they have begun offering a 90 day warranty on heart bypass surgeries. The warranty, called ProvenCare, charges more upfront for the surgery, but covers any followup visits or care for complication for the critical 3 months after a heart bypass.
Seems obvious, right? Warranties are standard in every other segment of consumer goods, but its a first in health care. The fundamental shift here is a large group of care providers electing to get paid for outcomes rather than effort.
Under the typical system, missing an antibiotic or giving poor instructions when a patient is released from the hospital results in a perverse reward: the chance to bill the patient again if more treatment is necessary. As a result, doctors and hospitals have little incentive to ensure they consistently provide the treatments that medical research has shown to produce the best results.
Heart bypass surgeries are pretty standard, but Geisinger's work showed they are anything but standardized. In order to be in a position to offer this warranty, the whole process, and the perspective of the doctors, had to shift.
Before ProvenCare began, Geisinger’s seven cardiac surgeons each delivered the care they believed was best for patients. And that care varied. “We realized there were seven ways to do something,” said Dr. Alfred S. Casale, the director of cardiothoracic surgery at Geisinger.
The story of how the process and the doctor's approach had to change is fascinating, but the real impact of this experiment is not the use of product manufacturing techniques to improve quality. Hospitals have been trying to introduce this for years, to reduce errors in emergency room procedures, giving drugs, and moving patients. Without a business model to support these quality improvements, they have not reached a tipping point.
The real impact of ProvenCare is that it wraps quality improvement around a new business model ; one that is centered on the patient, that delivers better value for less cost and less pain, and incents the hospital to be accountable for its results. By charging a fixed price up front, Geisinger is on the hook for delivering care that minimizes complications later, because those complications will eat away their profits. The patient gets a more successful surgery, insurers get lower total claims, and Geisinger cuts through the me-too clutter of hospital marketing to get more customers.
To read the full story in the New York Times, click here.
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