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New Mexico Business Weekly

By Dennis Domrzalski, Reporter

When Dr. Richard White decided to participate in a federal Medicare pilot program in Albuquerque to standardize hip and knee replacement surgeries, he was excited because he knew bringing down the cost of the surgeries would be a key step in helping reduce overall care costs.

But White, a consultant for orthopedic program development at Lovelace Health System, has found another benefit to standardizing hip and knee replacement surgeries: The procedures can be done faster, and doctors can do more of them a day.

That’s important because health care officials are predicting a 150 percent increase in hip replacements over the next 10 years and a 75 percent increase in knee replacements, White said.

“If you [a hospital system] are operating very efficiently, instead of doing four cases a day, you can do six cases a day. The issues are not just about cost, but also about volume. If we don’t have a way to handle all these patients, we will have a patient access problem, and that’s the last thing we want,” White said.

Lovelace joined the U.S. Centers for Medicare and Medicaid Services Acute Care Episode Demonstration Project in November 2010. Under the project, CMS asked Lovelace and four other hospital systems in the U.S. to offer discounts on hip and knee replacement surgeries for Medicare patients. CMS gives the hospitals a bundled payment at the discounted price for each surgery. If the hospitals can perform the surgeries for less than that amount, they share the savings with doctors and with patients through rebates for those operations.

In the program’s first 18 months at Lovelace, surgery costs have been reduced by 10 percent, and White said he’s hoping to reduce them by another 5 percent. The average knee replacement surgery costs Medicare about $15,000, according to a September study in The Journal of the American Medical Association.

So far, the eight to 12 orthopedic surgeons who have participated in the program at Lovelace have performed 376 orthopedic procedures, said Lovelace spokeswoman Laurie Volkin.

“I think it is going very well, and I think it shows that all the doctors and hospitals that historically have not been able to work together can work together when given the chance,” White said. “We know what the advantages are, and everybody who is participating is doing so in a very enthusiastic way.”

Troy Greer, CEO of Lovelace Medical Center, said the ACE program is helping the U.S. health care system “move from a transactional relationship to one of interacting and finding a better way of doing things.”

“Before there was not this degree of integration. We have always focused on quality, but now we have to address costs and simplicity,” Greer said.

White said the standardization process has been one of “taking a very complicated procedure and making it very simple.”

“The fewer decisions that a multitude of providers have to make, makes it easier for everyone to be on the same page,” White added.

White and other doctors in the program worked with officials at Lovelace Medical Center, Lovelace Westside Hospital and Lovelace Women’s Hospital to standardize hip and knee replacement surgeries. They found, for instance, that instrument trays in operating rooms for lower limb replacements had $200 packets of instruments and acrylic cement used to affix joints.

Those instruments and cement are almost always used in knee replacements and almost never for hip replacements. But they wound up in the instrument trays for both surgeries, White explained.
Keeping those packets off the trays for hip replacements has saved $200 per operation, White added.

Bundled payments like the ones offered in the ACE program are seen by some health care experts as the key to reducing health care costs. The coordinated care model of health care uses bundled payments, or a set amount per month per patient, to doctors and hospitals. If doctors and hospitals can keep patients healthy, they keep the money not spent on treating the patient.

According to CMS, the ACE program at Lovelace Medical Center has resulted in an average savings of $311 for each hip and knee replacement surgery.

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