More than 60 percent of healthcare providers believe bundled payment models, which package out- and in-patient costs, professional fees and post-discharge costs related to specific conditions into one payment, may improve the quality of healthcare delivered to patients and create cost-savings, according to a recent poll conducted by KPMG LLP, the audit, tax and advisory firm.
In the KPMG poll of 190 healthcare providers, largely represented by hospitals and health systems and large scale physician groups, 38 percent said they are “already working with bundled payments,” while 24 percent responded “Not yet, but we plan to.” Thirty-six percent remain undecided on developing and only two percent stated that they had no intention to offer bundle payment plans.
“Hospitals and large physician groups are warming up to bundled payment options as a means to enhance control over the total path of care (quality and cost) and to create a much more patient-centered experience,” said Marc Berg, KPMG’s head of strategy and transformation for Healthcare and Life Sciences. “Based on our study, providers are generating anywhere between 15 to 60 percent or more of their revenues from risk-based methods, such as bundling. This is much more than even one year ago. We expect those numbers to grow further as providers see how bundling can strengthen relations with physician groups and take steps toward becoming preferred partners with the payer community.”
Berg added that the current Centers for Medicaid and Medicare Service (CMS) Bundled Payment program provides a unique opportunity for providers, who must act quickly to participate in the program. CMS’s bundled payment deadline is November 1st.
Challenges in implementing bundled payments
Forty-four percent of providers identified aligning physicians and hospitals as the greatest challenge in establishing a bundled payment plan. This sentiment reflects a history of misalignment between physicians and hospitals payment methods and operational goals. Nearly a third of respondents (31 percent) felt control of expenditures throughout the bundle posed the biggest challenge; while 18 percent believed the ability to harness performance information across the organization as the most significant barrier.
Providers were almost equally split when asked about the key components of bundled payment strategies. Twenty-eight percent indicated that the ability to harness and manage big data would lead to success. Twenty-six percent felt providing resources for program design, administration, and provider contracting were necessary. Another 26 percent cited commitment from top leaders as critical. Twenty percent believed an open mind to new ideas was essential.
“We are seeing a convergence in the market happening where all players -- life sciences, payers, providers -- are changing their business model to create value for consumers,” concluded Berg. “With bundle options, such as those offered by CMS and private-payer bundles, hospitals can reduce unwarranted admissions and readmissions, decrease lengths of stay, improve cost-effective prescribing and promote volume growth by increasing market share.”
About the study
KPMG LLP conducted a webcast on October 4, 2013 and included a series of survey questions pertaining to bundled payments. Responses were gathered from 190 healthcare providers, mostly affiliated with hospitals and health systems, large physician groups and suppliers, at the conclusion of the webcast.
About KPMG Healthcare and Life Sciences
KPMG LLP is a leader in healthcare convergence, assisting organizations across the Healthcare and Life Science ecosystem to work together in new ways to transform the business of healthcare. With more than 1,500 U.S. partners and professionals supported by a global network of in 150 countries, we offer a market leading portfolio of tools and services focused on helping our clients adapt to regulatory change; design and implement new business models, and leverage technology, data and analytics to guide them on their path to convergence. Click here for more information on KPMG’s thought leadership in healthcare and life sciences.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International.”) KPMG International’s member firms have 145,000 people, including more than 8,000 partners, in 152 countries.
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