Physician Practices Still Slow on Bundled Payment Uptake

Tony Berberabe, MPH @OncBiz_Wiz
Published: Tuesday, Apr 29, 2014

Only 44% of large physician practices, hospitals, and health care systems have reported adopting a bundled payment system.

However, that’s up from 38%, based on a poll by KPMG, an auditing and consulting company. Back in October, the company reported that 36% of those polled were undecided about changing over, but since then the number has dropped to 29%.

From an administrative standpoint, it’s a complicated process to switch over to a bundled payment system said Marc Berg, MD, head of strategy and transformation for healthcare and life sciences at KPMG. Perhaps even more difficult is the change in physician attitude.

With a bundled system, “you, the physician, shoulder the responsibility of providing care in such a way that minimizes complications, for example, that there will be a shorter length of stay if your patient ends up in the hospital. You’re betting your income on how well you provide care. In a technical way, you assume risk, and that’s the hardest thing,” said Berg.

"Hospitals and large physician groups are increasingly adopting 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 Berg.

Based on the study, 58% of providers say they are generating more than 15% of their revenues from risk-based methods, such as bundling (see chart).

“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 health plans," said Berg.

Similar to the October survey results, 42% 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 (32%) felt control of expenditures throughout the bundle posed the biggest challenge, while 16% believed the ability to harness performance information across the organization as the most significant barrier.

Bundled payment systems are still in its early days—but expect fast progress, especially given the CMS Bundled Payment program. “At this time, it’s still experimental, so providers don’t have to move to this model right away. But if you’re not ahead of the curve, at some point, you’re going to be caught off guard by it,” warned Berg.

As a provider, how much of your current revenue is risk-based (whether bundled, capitated, or any other payment method)?

current revenue

More Healthcare Providers Using Bundled Payment Systems, But Some Still Undecided Ahead of CMS Application Deadline: KPMG Survey.

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