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Health care delivery models that support clinical integration and global payments are growing in number as hospitals, physicians, and health plans strive to compete in the era of value-based health care. But how does this approach fare in the marketplace against a specialty hospital that reimburses for episodes of care?

A CHCF-funded case study, published in the journal Health Affairs, explores how Kaiser Permanente Irvine Medical Center, which belongs to a large, integrated health system, and Hoag Orthopedic Institute, a single-specialty facility, are finding success using these different care frameworks in their orthopedic surgery programs.

Key findings:

• Kaiser Permanente Irvine Medical Center’s tightly coordinated orthopedics program — from preadmission to postdischarge — and its chronic disease management services are key factors in its success. The hospital has increased patient throughput by designing a “total joint dance” of well-choreographed operating room (OR) procedures and by breaking the standard two-day stay into hourly segments. Physicians receive capitated payments and modest bonus opportunities. Capacity constraints are a prime motivator for improving processes.
• The Hoag Orthopedic Institute is a leading participant, along with health plans and self-insured employers, in initiatives to demonstrate value through innovative payment models, such as episode-of-care and bundled-payment arrangements. It achieves a high degree of clinical quality and efficiency by operating as a focused, high-volume, regional Center of Excellence model that standardizes all processes from patient education and surgery preparation to discharge planning. This care model offers physicians financial incentives to pursue process goals and to grow revenues.

The author concludes that despite Hoag’s highly effective specialty care model, it faces the erosion of its primary care referral network due to hospital and physician consolidation trends. Moreover, the market favors economies of scale and scope obtained through integration over focus and experience.

The complete article is available free of charge on the Health Affairs site through the External Link below.