Bundled Payments: Wherever You Are in the Supply Chain, Get on Board or Get Left Behind

On Oct. 16, Dr. David Friend presented the webinar “Bundled Payments: Clinical, Operational and Financial Implications” in collaboration with Zurick Davis. The full webinar can be viewed here, and a summary follows.

The time for bundled payments has finally come, and enforcement is coming. CMS has committed $300 billion to move away from fee-for-service payments by the end of 2018. End-stage renal care is already being bundled. And as of Jan. 1, 2016, CMS is making bundled payments mandatory for joint replacements. Oncology bundling is currently voluntary, but we believe it will likely follow over time, as will others. Bundled payments will, in fact, be the way care will be paid for in the future. They will transform the way healthcare is delivered.

And this has enormous implications for every business along the healthcare supply chain. At BDO, we believe that the total impact as a result of bundling and other changes in the healthcare system over the next decade will amount to $10 trillion in wealth being created for those who can adapt, and over $4 trillion in losses for those who cannot. And it’s not just acute-care providers who will be pressured to review the value they offer. While 40 percent of a typical patient episode might be spent on hospital care, there’s another 60 percent being spent on skilled nursing, professional fees, readmission and more. Bundled payments will demand accounting for quality and for price. Value is, after all, a mathematical equation – not just a sticker price.

Whether you’re a doctor, a drug maker or a replacement hip manufacturer– you’ve got to understand where your costs compare to your own competitors and to the total cost of care, and how you fit into the supply chain for bundled payments. Most providers and health-related businesses aren’t currently price-efficient and outcomes-sensitive because they’ve never had to be. But comparative data on quality and outcomes and price are growing. And like it or not, CMS is moving toward a five-star rating system that will force underperformers out of the market. Drug companies, medical device manufacturers, professional services providers and care providers along the entire continuum must get on board with defining the right care, at the right time, at the right cost – or get left behind.