Trending Developments: Out of State Care for a Flat Fee: Boeing Contracts with Cleveland Clinic

In this issue, Boeing Contracts with Cleveland Clinic; Time Magazine has special report on health care; Genworth starts charging single women (vs. married couples or single men) higher premiums for long term care;  some states starting to rate health plans on quality; Gov. Inslee  names Robert Crittenden, MD, former health policy adviser to Gov. Booth Gardner , as his senior health policy adviser and other state news.

Two things make the Boeing story interesting.  First, rather than rely on local hospitals, Boeing  selected the Cleveland Clinic for critical heart surgeries, such as heart value repair.  Secondly, the Cleveland Clinic has a guaranteed flat fee for their services.   Of the complicated 4,200 heart procedures the Clinic performs every year,  nearly half—or 2,000 are with patients from out of state.

“We have been using a bundled payment system for over a decade now and we have become more sophisticated in how we prepare a package,” says Michael McMillan, Executive Director of Market and Network Services for the Cleveland Clinic, located in Cleveland, Ohio. “We can package all the bills—physician, hospital, labs, pre-and post-operative care—so there in one guaranteed cost for Boeing and other employers.  We can so this because of the greater predictably and better outcomes of our procedures and the quality of our surgeons.”

McMillan says this is a triple win:  it creates value for the employer, no out of pocket costs for the employee, and creates greater value for the patient in the form of higher quality and better outcomes.

“Higher quality and better outcomes are more cost effective,” indicates McMillan.  “Employers want to purchase value.  They look around and can see the tremendous variations in care and outcomes between hospitals and health systems.  Therefore getting employees to the right place is a value not only to the employer, but to the patient because of predictable quality care.”

“The real value comes in complicated high end procedures, such as heart value repair vs. heart valve replacement. It is a delicate procedure, but it is not only a lower cost for the patient, it also has fewer adverse events and overtime produces better patient results,” McMillan said.

“Employers like Boeing follow their health care costs.  They know that five percent of their employees can account for 40 to 50 percent of their health care costs and they want to purchase value for them and their employees,”  according to McMillan.

The Cleveland Clinic is now looking at bundling some other high end, complex neurosurgical, digestive diseases, urological and orthopedic surgeries.

What enables the Cleveland Clinic to do this is the predictability of their care outcomes and quality.  Consistency and quality count.  But, tremendous variations in care exist in hospitals around the country.  In Washington State, for example, the Foundation for Health Care Quality found that 47% of all the non-acute PCI (Percutaneous Coronary Intervention—i.e., opening a blocked artery) procedures in the state in 2012 could not be classified because of insufficient information.  See the chart on the last page of the report.

We will see more of these bundled services in the future as hospitals and physicians grapple with quality outcomes and greater accountability that is beginning to be felt with some provisions in the Accountable Care Act for quality measures and fines for too many hospital readmissions.


For a relatively short read on the contradictions in the health care system, read Time Magazine’s  March 4th Special Report:  Bitter Pill.


As a follow-up to Esther’s story, Genworth will be the first long-term care insurance company to begin charging higher premiums for single women.

Interestingly enough, the higher premiums will not be charged to couples or single men.


Some states will start rating health plans on quality.


Governor Jay Inslee names Robert Crittenden, MD, former health policy adviser to Gov. Booth Gardner (1985-1993) as his senior health policy adviser.

Kathleen O’Connor, March 1, 2013

About Kathleen

Kathleen O’Connor: 30+ year health care consumer advocate, non-profit executive and author. For more information about Kathleen, please see "About" on the main content bar above.
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