CODE speaking with Dr. Alexander R. Vaccaro, MD, Ph.D. at the 4th Interdisciplinary Conference on Orthopedic Value Based Care 2020

Session Topics: 

  • Localized Treatment for Osteoarthritis Knee Pain with a Novel Intra-Articular Formulation – The Secretive Nature of Pricing in the Orthopedics Healthcare Market
  • VBC: Multidisciplinary Stakeholders Panel
  • Metrics in Orthopedic Surgery: Why, What, When

Interviewee: 
Dr. Alexander R. Vaccaro, MD, PhD
President and Surgeon-in-Chief
Rothman Institute Orthopedics

Breanna Cunningham:
Hi there, Bre Cunningham here with CODE Technology at the OVBC 2020 Conference. I have the pleasure of interviewing Dr. Vaccaro today. He is the President at Rothman Institute. He’s been there for 24 years – Spine surgeon, neurospine, correct?

Dr. Alexander R. Vaccaro:
Well, I’m an orthopedic spine surgeon, but I am a professor of neurosurgery. I like the plug though. I liked that.

Breanna Cunningham:
That is where it gets confusing.

Dr. Alexander R. Vaccaro:
Yeah. Do I look like a neurosurgeon?

Breanna Cunningham:
No, you don’t.

Dr. Alexander R. Vaccaro:
Not that intellectual.

Breanna Cunningham:
You have a great sense of humor.

Dr. Alexander R. Vaccaro:
Good.

Breanna Cunningham:
I just got out of your talk that was on price transparency and kind of the nuances and the difficulties of understanding cost in healthcare. So I’m excited to deep dive with you on that. With that, we’d love to open up with your thoughts on the conference, how you became a part of it. You’ve been here for three years now.

Dr. Alexander R. Vaccaro:
Right, so I did know everything about the conference. I guess this is the fourth year. I got invited to speak and what happens with a person like me, so busy, I come out, I give my talk, I say thank you very much and I leave. This is one of the few meetings where I said, “You know, this sounds interesting, I’m going to stick around and listen to what is presented.” The content was phenomenal. We have hospital CEOs, we have governmental leaders, we have healthcare system CEOs and I just learned so much and I’ve used the content of this meeting and my subsequent talks throughout the country. In fact, I gave a keynote speech as a president of Cervical Spine Research Society on behavioral economics and that was spurred by a speaker here, an anesthesiologist who got up and talked about behavioral economics and I’m like, “Wow, that’s the reason why we make economic decisions. It’s all behavioral economics.” So that’s why I got into it.

Then they asked me to give a talk about things that I’m not familiar with, like I had to talk about the hidden price problems with orthopedic implants. I was like, “Okay, that’s easy. An orthopedic implant costs a dollar to make but we sell it for five. Let’s talk about transparency.” Then I found out there was no transparency. Then I found out my hospital administrators didn’t even know how much it costs because rebates come at the end of the year, they applied generally to the cost of care. Then I looked at the politics of it and where we’re going and I realized, wow, transparency is where it begins. Understanding what your costs are … which brings up another interesting concept, time driven cost accounting, where you look at the transactional nature of what something costs.

You look at the personnel involved and you tag everybody that gets involved with a patient from the person who parks the car, the nurse who greets you at the front desk, the resident who does the history and physical, the doctor that comes into speaks to you. You look at what their salary is, what does that transaction costs, and then you look at what the actual product delivered costs and then you have an understanding of what it costs to deliver care.

So we did that. We applied those principles to the cost of care in spine surgery. I found out exactly how much it costs to do an inter cervical decompression and fusion. I found that how much it cost to do a lumbar decompression, and then I saw what I charged and then I saw what my reimbursement was so I can come up with just any of negotiations as my reservation point at which point we can’t provide care because we’re not making as much as it cost.

It was interesting. So I finally figured it out once I knew my true cost, which you as a consumer do not have the knowledge base yet because it’s not being supplied. But with Trump’s new executive order that by January of 2021, you have to post what an episode of care will cost. It may not get into the granularity of an implant or a suture or an IV bag, but it’ll … you’ll plug in your insurance, it’ll say this is what you have, this is what your cost will be, this will be your out of pocket costs. Then you can take that information, go to another facility, type it in, say, “Oh, this is less expensive. Let me look at the reviews and social media. Let me look at the outcome measures published. Is this quality care provided at this institution?” And if so, you can then shop your care route. So that’s the future.

Breanna Cunningham:
So it’s interesting as a consumer, but as a surgeon, do you feel that most surgeons understand that cost?

Dr. Alexander R. Vaccaro:
No, no. This is a new concept. It was a … Porter came out with this publication that really looked at it and I think it’s just a wonderful opportunity to get an understanding. Kevin Bozic, who’s a speaker here, is a leader in healthcare economics and he … I think I saw him speak one day and he talked about the concepts. We went up to Harvard, we read the book on how to do that. So the average orthopedic surgeon doesn’t know it, they rely on the administrators at their hospital or whoever employs them to know it. They don’t even know it. We’ve been applying these principles to all the hospitals we work at and we get together with the administrators. Now the administrators know at the end of the day how much their expenses are, how much their revenues are and how much they pay people, if they made a margin or not. They know that, but if they really want to be efficient and really want to maximize the income that they can make, an income that’s respectable and affordable, they have to implement those processes.

Breanna Cunningham:
Interesting. Almost like patient level value analysis.

Dr. Alexander R. Vaccaro:
Absolutely.

Breanna Cunningham:
Now, are you doing this at Rothman outside of spine or is it predominantly in spine right now?

Dr. Alexander R. Vaccaro:
We did it in joint arthroplasty. We did it in spine. We’re starting to do it in shoulder, elbow, hand, foot, and ankle.

Breanna Cunningham:
Interesting. How are you sharing the data with the surgeons and what has been the impact of that?

Dr. Alexander R. Vaccaro:
It’s complicated because we have to be careful because we now know what the cost of care is. We can’t really talk about what we get paid because again, the hidden clauses in the contracts you have with private insurers, you can’t talk with another orthopedic surgeon about how much you get paid in a contract. That is an antitrust violation. So we sort of index everything on Medicare and we talk about that but then we don’t talk about the revenue side because that’s illegal to talk about. But we share within our group, this is the cost of care. So if we get up on a podium, we say, “Listen, know your costs. If your cost is 18, 19, 20,000 for an inter cervical, make sure whatever contract you negotiate, you get paid more than that or you’ll be out of business over time.

Breanna Cunningham:
How do you feel about that being illegal? I mean, I felt just for me, as someone that runs a business, I would, I need to know both sides of that equation.

Dr. Alexander R. Vaccaro:
Well, these stock laws and you have to abide by stock laws because antitrust is important because there can’t be collusion between physicians, can’t be collusions with insurance companies. But I think that we’ve figured out over time, price transparency, cost transparency is the only way to bend the cost curve. So the government is now allowing it and the department of justice is now allowing certain types of gainsharing plans to go forward. So if it bends the cost curve and quality is not sacrificed, then the government will look at that and say, “Listen, we’ll allow that information to be shared.” So I think that’s a good thing. You have to just protect competition because theoretically, competition of free markets brings the cost down so therefore it’s important for people to know what the true costs are.

Breanna Cunningham:
Sure. Makes sense. You guys have 53 bundles going on at Rothman right now, which is mind blowing to me. We’d love to hear pearls and perils of participating in bundles and any advice that you’d have for people that are just starting that process.

Dr. Alexander R. Vaccaro:
Sure. There’s several things you have to do with a bundle. Number one, you have to look at how the government reimburses on a bundle. They look at certain CPT codes, certain DRG codes. They look like a cost … DRG codes are very inefficient because in spinal fusion, you get paid for a single level fusion the same thing you may get paid for multilevel fusion. So the first thing I say with a bundle is understand your costs. So we break it down on CPT codes, not DRG.

Then make sure you have an adequate population of patients because if you have a small population of patients, if you have an outlier that costs too much money, you’re going to lose on the bundles. Then you’ve got to get a team together. Then you’ve got to get data analytics because you have to collect the data and then once you put it all together, then you have to get what we call a navigator. You now know what it costs to provide care. Now we have a patient that comes into the office. You want that patient to have a seamless experience, so you have to optimize that patient and now we have to have a navigator that says, “Okay, this patient has to be optimized. Let’s get the patient the best health possible. Let’s get their glucose levels down. Let’s get their weight down, let’s get them off of smoking.”

Then you have to decide what facility to do that procedure in. You want it to go to the least expensive, safe environment. Is that patient able to go to an ambulatory surgical center, community hospital, physician known hospital. I don’t want to go to the university because it’s so expensive but you may have to because the patient may be sick. Once you figure that out, then you proceed with care and that’s when you’re going to find that if you’re going to make money or lose money.

You could do it in a retrospective manner. Say the average cost of care for knee arthroplasty is this, pay me that money. I’ll be happy. Or you could do it prospectively. Listen, you pay me a certain amount of money. If it doesn’t come in under that number, I lose money. But if it comes down under that money, I win money. So we’ve done that for the 53 bundles of care and we’ve done great until recently.

So what happened recently? Well, the systems are changing. BPCI Advanced has looked at your past performance and they’ve sort of ratcheted down the reimbursement. They’ve said, okay, before you used your tax ID number and you were able to change the point of care and therefore saved money, but now we’re not going to let you do that anymore. Now we’re only focusing on your particular hospital so the point of care has been removed. Okay, now you’ve done that, now we’re going to say, “Okay, listen, you came in at this number, you really have to improve care. You have to come into this number.” So it’s really becoming more difficult in the federal government bundled payments to make money.

I said before, the Rothman Institute struggled two years ago and we struggled even more last year and we’re deciding that we’re sort of optimized our care to the point, which is the purpose of bundles, is to optimize efficient care to the point that we may not be able to make any money anymore. So we may have to say no to certain bundles and go into commercial bundles. It doesn’t mean that it’s a race to the bottom. We’ve sort of become as efficient as we can, which is the purpose of the bundled payment program in the first place and now we have to figure out how we want to participate? Do we move on to more of a population base, healthcare based model, per member, per month or so forth? That’s what we’re sort of evolving, because we’ve done the bundle now for nine years. Most people have not entered into that process. It’s a process you have to go through because you can get rid of variability, redundancy, waste, and you can work on your indications. Once you’ve optimized it, then you’ve probably bought them out and then you have to move on to some other payment plan.

Breanna Cunningham:
Sure. So we’ve talked a lot about the cost, a portion of the value equation, but not about outcomes. Tell me how you’re tying outcomes to the cost data and ensuring that you’re cutting costs in appropriate areas at Rothman.

Dr. Alexander R. Vaccaro:
There’s multiple different ways. I’m going to give a talk later. We look at the whole enterprise, like where do patients go? What’s their readmission rate, what’s their complication rate, how many patients fall below a BMI of this hemoglobin A1C below that and so forth. So we look at it from an enterprise perspective then we look at it at a divisional method. Let’s look at the joint arthroplasty group. How many readmissions do they have? How often do they go to the emergency room? Then we look at it at a physician level where we look at process measures on their readmission rates, their complication rates, where do they discharge patients, and then we look at it from a patient perspective. How do the patients like their experience, which is the most important thing that you’ve heard today? It’s the patient really satisfied?

So we look at all that and we have a report card and we use that report card to incentivize or penalize the provider. If your outcomes, and we collect them all, comes back and you’re not doing well and we know what you’re … and if you’re not doing well, your episode of care costs are usually higher than that goes on your report card and whatever bonus we have 10, 15% at the end of the year, you either make it or you don’t make it by those outcomes.

The big problem we have is the burden of collecting care. I’ve been working in different ways with different companies to make outcome collection passive, have your iPhone collect your activity data and then you at the end of the day plugin zero to 10 in terms of your, you know, VAS scores and your ODI scores and stuff like that. Make it simple, make it patient responsive to how a patient’s doing so you don’t have to have someone that you pay for in your office go out and set up a registry, which is expensive. That’s the future.

Breanna Cunningham:
Interesting. My last question for you is related to these reports. When you’re sharing these reports with the surgeons in the practice, are they blinded or is there full transparency?

Dr. Alexander R. Vaccaro:
Totally non-blinded, totally transparent, which is upsetting and good because sometimes when you … like I see things where Dr. Vaccaro, your sepsis rate was like 2.5% and I go, “I didn’t have any patient with sepsis.” So it’s the inaccuracies of some of the outcome measures we have, they could print it out in the dashboard. Everyone sees it and I’m like, “That’s not accurate.” Then I get upset. I guess it motivates me to find out what happened.

Breanna Cunningham:
Anger Management.

Dr. Alexander R. Vaccaro:
Exactly. So transparency is good, it motivates good behavior. It’s a little embarrassing, which is what it should be, and it may not be as accurate as it should be but it’s transparent. That’s why we do it and it’s great.

Breanna Cunningham:
Well, thank you so much for taking the opportunity-

Dr. Alexander R. Vaccaro:
Bree, thank you.

Breanna Cunningham:
… to sit down with us, and also just your radical candor and transparency. Your talks are so entertaining. I highly encourage everyone to attend. Thank you.

Dr. Alexander R. Vaccaro:
Thank you.

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