Episode Details

Believe me, filling in for the uncontested master of podcasts, Stacey Richter, is just a tad unnerving!

My name is Dr. Steve Schutzer. I'm an orthopedic surgeon specializing in joint replacement surgery, and I think it's fair to say that I'm more comfortable, in my own lane, doing complex surgery than doing this introduction to our encore podcast 294 entitled "Building a Center of Excellence: A Playbook for Physician Entrepreneurs," which aired originally in October 2020.

But when Stacey graciously offered me the honor of doing so, I said to myself (sic: Steve, suck it up) what an opportunity to share with the devoted listeners of this show my humble perspectives on the prominent position COEs (also known as Centers of Excellence) are playing in this rapidly accelerating, evolving, and exciting healthcare landscape.

So, there's an ancient Chinese proverb that goes like this: "When the wind of change blows, some build walls, and others build windmills"—or in this case, Centers of Excellence!

And the winds of change in healthcare are blowing, maybe even reaching gale force.

In the year since episode 294 aired, there's been unambiguous upsurge of activity, in part fueled by the pandemic, that has collectively and finally moved the healthcare value agenda across the chasm, over the inflection point—and there's no turning back. Unaccountable fee for service as the predominant payment model for healthcare services is, well, shall we say, on its last legs—being replaced by reimbursement models that are aligned with the clinical and financial outcome of the services actually delivered to our patients. For COEs, that's characteristically in the form of predictable bundled payments and fully warrantied episodes of care.

Question: Where do COEs fit in this new landscape?

Answer: COEs are the common pathway for all healthcare purchasers (whether they're self-funded employers, advanced primary care groups, Medicare Advantage—all of them) to steer agnostically to high-quality specialists focused on a defined set of healthcare services and who are willing to assume total cost of care for their product.

And the favorable impact of COEs on the ROI for purchasers has now moved beyond the realm of theory to indisputable.

Take, for example, the recent report by the RAND Corporation published earlier this year in Health Affairs: A study of over 2300 patients who had either total joint, spine, or bariatric surgery done under the Carrum Health program at one of their COEs. Carrum Health is a value-based national COE platform that connects self-insured employers with top providers under standardized bundled payment arrangements. And now in full disclosure, I serve as medical advisor for the company; and our program, the Connecticut Joint Replacement Institute in Hartford, Connecticut, is actually a Carrum COE. But in this independent RAND analysis of two years of medical claims data, the savings per procedure when the surgery was done at a Carrum COE was over $16,000 per procedure. Readmission rates were reduced 80% on average. Out-of-pocket cost to the patient? Zero. And an astonishing 30% of patients who were in the queue awaiting surgery ultimately were treated nonoperatively!

Peter Hayes is president and CEO of the Healthcare Purchaser Alliance of Maine and a frequent guest on this podcast. His organization has been under contract with Carrum for approximately two years and recently reported an ROI of 58% and plan savings approaching $1 million.

And these data also closely reflect that reported in the Harvard Business Review two years ago by Ruth Coleman and colleagues from their experience with Walmart COEs.

Finally, you know, I heard Stacey say of COEs in one of her podcasts, "This is not something you can do on a Tuesday." Agree. Prescient advice. As you will hear once again in just a moment, this takes work. But physician leaders