New Centers of Excellence Models Advance Stakeholder Value

By Lucas Pauls and Michelle Zettergren

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Hospitals have traditionally built centers of excellence programs to develop and demonstrate strength in areas of clinical expertise. As originally envisioned, COEs were a way to bring best-in-class, coordinated care to local communities and attract patients who require specialized and complex care that can be scheduled. 

In recent years, the COE model has evolved. Health systems and payers — especially large, self-insured employers — have begun working together directly to bring the industry-leading care of COEs to patients in a way that drives value for all stakeholders. In this evolution, large employers have been integral to the success of COEs. With the promise of dedicated patient volumes and high expectations for measurable improvements in patient outcomes and costs, they have collaborated with hospitals and health systems to design COEs that meet the needs of their employee and dependent populations. 

As we enter 2021, the next iteration of COEs is at hand — leveraging relationships between health systems and third-party administrators (TPAs) to bring the promise of improved outcomes and costs to smaller self-insured groups and employers that might not have the resources to create effective COE partnerships on their own. 

Benefits for All Stakeholders

COE programs can potentially be a win for all stakeholders. Health systems can experience greater patient volume and higher net revenue from TPA or employer partners steering additional patients to their facilities. And for patients and payers, the upside is lower costs, fewer complications and higher patient satisfaction. 

One prominent illustration of the success potential of COEs comes from retail giant Walmart. According to results published in Harvard Business Review in 2019, the company’sCOE program has had more than 5,000 participants, with more than 95% reporting they were “satisfied” or “very satisfied” with the care and overall experience. Specifically, Walmart health plan members who received joint replacement care with the COE spent fewer days in the hospital, had significantly lower readmission rates, avoided post-surgical care in a skilled nursing facility, and returned to work faster.

The problem for many smaller employers is they often lack the size and expertise to effectively establish and administer a program like this. To help those organizations benefit, programs like the joint replacement COE established by Mount Sinai Health and MagnaCare are designed to fill the void and deliver similar value across stakeholders. 

New Models Create Opportunity

Mount Sinai began its COE journey four years ago with a total joint replacement program designed to serve the needs of a large labor union in the New York area. So far the results have been outstanding. Among the approximately 140 surgical episodes performed through the COE program each year, complication rates have been reduced by half and net promoter scores from patients average close to 100 (the top possible score).

By forging a partnership with a TPA, MagnaCare, Mount Sinai is making that total joint replacement COE — and its positive outcomes — available to more labor and other self-insured groups. We believe this is a significant development for several reasons. 

First, while total joint replacement has become quite common in the medical profession, for the patient it’s not common at all — it is life-altering surgery that requires significant care coordination and recovery that many individuals find difficult, at best, to navigate on their own. It also tends to be very expensive under traditional, fee-for-service arrangements and can come with significant costs to both the employer and the individual receiving care.

The Mount Sinai/MagnaCare partnership specifically addresses those challenges to prioritize better outcomes and manageable costs. Through the program, MagnaCare guides its clients’ eligible members to preferred Mount Sinai facilities and providers for total joint replacement. MagnaCare leverages its administrative expertise to shoulder all the program administration that might currently prevent smaller self-insured groups from attempting to build COE relationships. Top Mount Sinai clinicians then perform the surgery and all associated services — from pre-surgical office visits to follow-up care and physical therapy. In addition, each individual is connected to a care guide, who provides personalized support to help members navigate their care journey, including information about their procedure, coordinating any pre-surgery testing requirements, and securing free transportation and other post-surgery needs, including nutrition support.

Importantly, services are provided under a single, bundled payment — allowing for savings of 15%-30% over comparable services in a fee-for-service environment.

Value Goes Mainstream

Employers want these kinds of results. A 2020 Willis Towers Watson report reveals that nearly three-quarters of employers (73%) intend to adopt and expand different types of healthcare delivery models, such as centers of excellence (COEs) and high-performance narrow networks, over the next three years.

Clearly, the time is right for more employers of all sizes to explore the benefits of COEs. The partnership between Mount Sinai and MagnaCare can be a model to emulate.

Lucas Pauls is Labor Lead for Mount Sinai Health Partners, where he focuses on developing value-based payment approaches that change the way healthcare is paid for and provided. A pediatric physical therapist with a master’s degree in Public Administration, Pauls has worked in labor healthcare for the past 12 years.

Michelle Zettergren is President of MagnaCare, a division of Brighton Health Plan Solutions. MagnaCare is a third-party administrator partnering with self-insured employers, Taft-Hartley trusts, TPAs, carriers, and workers’ compensation and no-fault payors to achieve greater healthcare value.