James Caillouette, MD, Surgeon in Chief, Hoag Orthopedic Institute, shares his insights on building an Orthopedic Value-Based Center of Excellence.

 At the March 17, 2011 PBGH Board meeting, Jamie Caillouette, MD, Surgeon in Chief, Hoag Orthopedic Institute, presented Building an Orthopedic Value-Based Center of Excellence, a model for bundled purchasing of orthopedic services at Hoag Orthopedic Institute in Newport Beach, CA. In the following guest post, he summarizes his presentation and invites employers to contact him to learn more. PBGH's blog provides a conduit to share information and creative ideas; postings do not imply PBGH endorsement of a particular program or product. For more information, please contact Dr. Caillouette at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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"We all understand the pressures on the health care system in the United States and the impact of spiraling costs on employers and our economy as a whole. At the root of the problem is a system of payment that has created long standing divisions between doctors, hospitals, patients, private payers and government payers.

We have been part of the various experiments by payers over the past decades in California including fee for service, managed care, and capitation. The battle between for-profit payers to maintain their margins, employers to provide health insurance and maintain their margins, and hospitals and doctors to continually respond to payer negotiations continues to rage as the dollars become more scarce. All of this was predictable based on economic fundamentals. Studies have demonstrated wide variation in care delivery across the United States. In addition, there is wide variation in payment for identical services by private insurers across the United States. Clearly, there is a need for change in this system for both Medicare and Commercial payers and how payment occurs is contributing to this variance in care delivery.

 We believe that there is a better way which is to embrace value based health care where value is defined by health outcome per dollar spent. We have built an orthopedic specialty institution from the ground up with this as our mantra. The Hoag Orthopedic Institute encompasses high volume inpatient and outpatient facilities. We have several years of experience in providing care under bundled or episode of care pricing for patients who are incentivized by their employers to travel for their orthopedic procedures. We have done the hard work of developing agreements between all care providers including the various physicians, facilities, physical therapists, home health services, etc.  We are using outcome data and published evidence to drive excellence of care. We have committed to participate in the IHA Bundled Pilot and in the CJRR registry both of which have been sponsored by PBGH. We are now ready to partner with employers on a large scale under a bundled payment model. For employers this provides predictable costs and an end to end solution for the highest cost service in health care-orthopedic care. Our WebEx on May 13th will go into detail regarding this.

Why are we doing all of this? While there are many reasons, one is that we are committed to being a change agent in solving the crisis in health care. Fundamentally, the founders of this effort are physicians and we are driven by that ethos. We believe that our mission is to provide the best care to as many who need it as possible. In order to do this, we need to create efficiency in care delivery to maximize the impact. We are hoping that the employer members of PBGH will  join this effort to create positive change in health care delivery."