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New Mexico Business Weekly

CMS efficiencies lower health care bills
Overall, White and his colleagues reduced limb replacement costs 11%

by Dennis Domrzalski, NMBW Reporter

In the world of medicine and health care, it’s often difficult to break with tradition unless cost savings are realized.

That’s exactly what happened when orthopedic surgeons who do hip and knee replacements at Lovelace Medical Center in Albuquerque analyzed a few of their operating room habits.

The evaluation and brainstorming sessions by Dr. Richard White, consultant for Orthopedic Program Development at Lovelace Health System, and others at Lovelace, are part of a three-year pilot project by the U.S. Centers for Medicare and Medicaid Services to standardize certain medical procedures and reduce their costs.

CMS’s Acute Care Episode Demonstration Project [ACE] was initiated in 2009 and involves five hospital systems in four states. Lovelace applied to be part of the project and joined it in November 2010.

As part of the effort, CMS gives the hospitals a fixed, bundled payment for each surgery performed on Medicare patients. Any cost savings the hospitals can realize below that fixed price are shared with doctors and patients in the form of bonuses and rebates.

In the past 10 months, the physicians and their support staff brainstormed about how to standardize hip and knee replacement surgeries to lower their costs. They discovered that tradition had added at least one unnecessary expense to hip replacement surgeries.

The instrument trays in the operating rooms for lower limb replacements contained $200-a-piece packets of disposable instruments and acrylic cement used to affix joints.

However, the cement and instruments are almost always used for knee replacements, and almost never for hip replacements. But they were showing up in the instrument trays for both of the surgeries.

“If you opened up all the materials for a hip replacement, that would almost assuredly be a waste,” explained White. “When you look at 1,000 to 1,500 surgeries a year, $200 adds up.

“We have eliminated anything that would not be used [for a particular surgery], and my guess is that somewhere between 20 to 30 percent of all supply costs have been reduced because of removing these things.”

Reducing costs

Overall, White and his colleagues have reduced the costs of hip and knee replacements by 11 percent.

Since joining the project, doctors who work with Lovelace have performed 231 hip and knee replacement surgeries. The average rebate to those patients has been $216, said Lovelace Health System President and CEO Ron Stern.

The project has not only reduced costs, but it has expanded the number of surgeries that can be performed, and has improved patient outcomes, Stern added.

Reducing patient stays

Before the program, patients stayed in the hospital an average of 3.3 days after surgery, and 50 percent of them needed to work with skilled nurses after their operations, Stern added.

Now, the average hospital stay is 2.5 days and almost no patients require skilled nursing care. In addition, volume for those surgeries is up 30 percent, Stern added.

In November, Lovelace added cardiac procedures to the program. Dr. Robert Federici, medical director of Cardiology at the Heart Hospital of New Mexico at Lovelace Medical Center, is heading that ACE effort, which involves four cardiac surgeons and 20 to 25 cardiologists.

So far, the group has been working to reduce the cost of pacemakers and other devices used in heart surgeries by putting them out to bid.

“I think this is one piece of the puzzle” to improving care, reducing costs and improving efficiency, Federici said.

“The government has not generally tried to align doctors in terms of saving money and making things more efficient. It’s timely and overdue,” he said.

White said efficiencies and cost reductions realized by the ACE effort will be necessary as the number of people needing joint replacements increase and the number of doctors decreases.

“In 2011, there were 300,000 hip replacements [in the U.S.] and 500,000 knees. By 2030, the number of hip replacements are expected to increase by 150 percent, and knees by 300 percent,” White said. “We are going to have to be more efficient to handle all of these, while providing better care.”

 Source: New Mexico Business Weekly

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