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 / Winter 2013 / Issue 73(originally published by Booz & Company)


Healthcare Shifts from à la Carte to Prix Fixe

Developing bespoke care protocols, payment formulas, and administrative systems for each program is unrealistic. Payors and providers will probably find many common areas of cooperation and development—most likely involving standardized care bundle definitions. There may even be new entrants that build businesses around publishing care protocols and providing sophisticated IT tools for managing bundles. Without this kind of cross-employer and cross-sector cooperation, bringing bundled care to the big middle will take decades, if it happens at all.

Business leaders outside the healthcare sector have a role to play as well. First, they can make sure that their health plan is considering bundled care as an option for employees. Second, they should take a long-term view. Given the novelty of this concept, the early benefits are apt to come in the form of better outcomes (such as healthier employees) rather than lower costs. Third, some large employers can be more active by leveraging their size in local or regional markets. This would involve working directly with the health plan and leading providers in that region to turbocharge the development and penetration of bundled care. By controlling a sizable group of employees—meaning potential patients—employers can drive more rapid development and implementation of bundled care for the big middle. Patience, knowledge, and a sense for when to act decisively will help their bottom line, their workforce, and the nation as a whole. 

The HEALS Approach to Bundles

Drawing on Booz & Company’s substantial experience in analyzing and creating bundled healthcare offerings, we have developed a unique approach, which we call HEALS (for healthy, acute, and long-term solutions). Like standard bundles, HEALS are all-in-one, end-to-end packages for specific medical conditions and procedures. They combine medical care, financing, and patient engagement into an integrated service at a flat fee, with a guaranteed outcome. To make this work, HEALS assembles a multidisciplinary team that collaborates to improve outcomes over time, along with a care coordinator to ensure that patients are engaged throughout the entire process.

Several features make the HEALS approach distinctive. First, the products are designed specifically around customer preferences and needs. By contrast, other bundles focus more on the cost advantages. This approach even extends to the question of which procedures and services might use a HEALS model. For example, some payors and providers have specifically decided not to develop bundles for highly standard outpatient procedures like tonsillectomies and insertion of ear tubes, for which the results are generally consistent and satisfactory. However, we believe the principles are as appropriate for these relatively simple procedures as for their more complex counterparts. The principles give patients a simpler, more transparent service with better customer satisfaction.

Another key difference is the focus on eliminating unnecessary administrative waste. Other providers and payors working on bundled care look at the investments needed to transition to a new claims system—a significant expense. However, we believe that HEALS can reduce administration expenses by 15 percent.

Last, HEALS takes a results-based approach. HEALS programs can be complex and costly initiatives. The economic opportunity for the health system must be big enough to cover its investment during the transition, so HEALS programs are designed to get up to speed quickly, ensuring the health system’s ability to thrive over the long term.

Reprint No. 00220

Author Profiles:

  • Gary D. Ahlquist is a senior partner with Booz & Company based in Chicago. He leads the firm’s work for healthcare clients worldwide, specializing in strategy and organization development for health plans, insurance companies, and providers.
  • Minoo Javanmardian, Ph.D. is a partner with Booz & Company based in Chicago. She works with the firm’s global healthcare clients, focusing on strategy, strategy-based transformation, and delivery-system innovation for payors and providers.
  • Sanjay B. Saxena, M.D. is a partner with Booz & Company based in San Francisco. He leads the firm’s U.S. Western region health practice, and co-leads its North American hospital and health systems practice.
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