Healthcare News & Insights

Bundled payments: Impact on hospitals, employers & patients

Bundled payments are becoming not just the choice for payors, but for employers and the general public as well. A new survey from PricewaterhouseCoopers (PWC) shows just how essential it is for hospitals to get on board with this growing reimbursement trend. 

The PWC surveyThinkstockPhotos-468673318 was designed to measure the current state of bundled payments, including their popularity among various stakeholders in health care.

Out of all respondents, 31% of hospitals and 20% of employers are participating in some sort of bundling program. In addition, 35% of hospitals are in an accountable care organization (ACO) where patient outcomes are tied to payments.

Although most hospitals aren’t participating in bundling arrangements, the benefits may soon convince more facilities to get on board before it’s required. Out of all hospitals in bundling arrangements, 63% experienced cost savings, and 69% improved the quality of care they provide patients.

Companies’ preferences

Employers are looking to participate in more bundled arrangements with hospitals and payors so they can reap some of the benefits themselves – most notably the cost savings.

In fact, 88% of employers surveyed said the current cost of health care is their top concern, and 72% said they’d require a decrease in at least 6% of their costs before they’d consider entering into a bundling arrangement (34% of employers who’ve adopted bundling said they’ve already achieved this goal).

The only area where employers and hospitals agree is cost-savings. While employers want broader, more far-reaching bundling arrangements, most hospitals plan to keep bundling agreements relatively narrow in scope.

In addition, employers want more bundles that focus on chronic conditions like diabetes, which can be costly to manage. Hospitals in bundling arrangements are mostly focusing on acute and procedural conditions (e.g., pneumonia, joint replacements).

What patients think

Generally, patients are more satisfied with bundled services than they are with other healthcare arrangements: 55% said they preferred the bundling arrangement over the previous services they received.

Even those who don’t directly participate are intrigued by their benefits – 61% of patients surveyed found bundles appealing (only 5% found them unappealing). And 80% of them would pick an ideal bundle over their current care arrangements. Sixty-two percent would choose a bundling arrangement with reasonable restrictions and “at par” pricing over their current care.

However, many patients aren’t aware of their options for bundling arrangements – which could be a hindrance for hospitals as more payors pressure them to participate in these arrangements. Only 31% of patients surveyed were familiar with bundles before the survey.

The best way for hospitals to counter this is by working closely with primary care physicians to get the word out about bundling, since 69% of patients said that information from their primary care doctor is the most helpful resource in choosing where to pursue care.

Paving way for bundling

According to the PWC survey, hospitals can take other steps to make bundled arrangements more beneficial to employers and patients by reviewing the characteristics of their local market, including employer/patient preferences, and their own strengths before choosing to participate in a voluntary bundling program.

Hospitals can also be proactive with anticipating services that may be subject to bundling by payors in the near future.

Facilities should identify services that have the most variation throughout the hospital in terms of quality and costs. That way, facilities can start putting their efforts into standardizing care for these conditions, reducing variation and improving outcomes.

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