Baptist Health Initiates Pricing Revolution

Written by Scott Blake on August 23, 2012


By Scott Blake

Baptist Health, South Florida’s largest private healthcare provider, is undertaking a sea change in setting healthcare costs: hospitals, physicians, and insurers or other payers consulting each other to agree on a price for patient care before — not during or after — services are delivered.

In an interview Tuesday with Miami Today, Baptist Health President and CEO Brian Keeley said his Coral Gables-based organization is taking the lead in Florida to usher in so-called "bundling" or "packaged pricing" in response to provisions of the federal Affordable Care Act, also known as "Obama Care."

The legislation calls for health care providers to have so-called "bundling" procedures for Medicare billing in place by 2014.

Baptist Health already is putting the new cost-setting system into action with Florida Blue, formerly Blue Cross and Blue Shield of Florida, the state’s largest healthcare insurer, and Baptist plans to negotiate similar agreements with other private insurers.

Baptist’s new approach to pre-determining health care costs, Mr. Keeley said, essentially is a reversal of the current "inherently inflationary" system in which services are provided and the costs are then tallied.

"The fundamental flaw" of conventional methods, he maintained, "is the incentive is to do more" in providing care when less might suffice.

Settling on the costs up front, he added, requires more coordination among all parties involved.

"This is a real team effort.… It will need a high degree of collaboration," he explained.

Under the new system, if Baptist were to exceed the pre-determined price for treating a patient, it would absorb the extra costs.

However, if Baptist was to come in under the pre-determined price, the physicians and Baptist would share in the savings, Mr. Keeley said.

Baptist, for example, is making investments to improve electronic patient medical records so physicians can better share information as a way to be more efficient when making decisions about care, he said.

There will be an increased emphasis, he added, on making decisions about medical procedures and related services that are "evidence-based."

For the federal government, the goal is to reduce Medicare reimbursements. As Mr. Keeley sees it, hospitals and other healthcare providers stand to break even under the new approach.

"In some cases, we’ll lose money. In other cases, we’ll make money," he said. "We think it will even out."

However, the real advantage in the new system for Baptist and other providers will be to gain patients — and market share — by being more competitive on price. The goal, he added, is not to sacrifice quality of care, but to eliminate unneeded or redundant services.

Baptist gets roughly 14% of its $2.5 billion in annual revenue from Medicare reimbursements, and that excludes Medicare Advantage payments through private insurers, according to Mr. Keeley.

Baptist — South Florida’s largest private employer with about 15,000 employees — treats about 1 million patients a year at its seven hospitals and nearly 30 medical plazas and outpatient facilities in South Florida, he said.

While some physicians were critical of the new cost-setting approach, Mr. Keeley said, such changes are necessary to control increasing US healthcare costs.

He added: "We decided to be very proactive."To read the entire issue of Miami Today online, subscribe to e -Miami Today, an exact digital replica of the printed edition.