How Much Can Selecting The Wrong ‘Center of Excellence’ Cost You?

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The term “Center of Excellence” (CoE)  is a powerful distinction. Self-insured employers have begun to apply this label to hospitals they partner with to deliver high-ticket, high-volume surgeries — like total knee replacements — to their employees.

For employers, the bundled pricing that CoEs offer (in exchange for a volume of patients) is an attractive prospect. But for the employees, the label means much more.

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When employers honor a hospital as a ‘Center of Excellence’, they dramatically raise expectations for it. The designation implies a promise of quality.

It leads employees to believe that they’ll get superior care from these institutions. They expect advanced techniques, efficient treatment, and above all – safe procedures.

Those are lofty promises. How well do Centers of Excellence live up to them?

Not as well as you might think. This is because selecting a high-quality hospital is not a straightforward task. There are two thorny problems.


1) Outcomes-Data is Complex and Opaque

Even under ideal conditions, hospital performance data would be tough to analyze.

Assessing outcomes across the continuum of care demands complex analysis of a huge array of variables. Non-healthcare specialists will struggle to make sense of the data.

And, conditions are far from ideal.

Privacy restrictions and proprietary data-silos limit what analysts have to work with; the available data is not standardized, and full of errors; and providers often resist direct comparison with one another.

This can leave employers without a workable, data-driven way to evaluate hospital performance.

So instead, they lean on a proxy – a hospital’s reputation in the community.

This leads to the second problem.


2) Reputation Is Not a Reliable Guide to Quality

Usually, prestigious hospitals have earned their pride of place. They excel in one arena, or several.

But they almost never excel at everything.

Our research has found that, even at big-name hospitals, performance can vary wildly across different surgical procedures. A hospital with peerless heart-surgeons, for example, might produce poor outcomes for knee-replacements.

This means that a strong reputation can’t guarantee positive outcomesand therefore, employers should not use prestige to identify Centers of Excellence.


Misplaced Trust Leads to Increased Costs

And yet, employers routinely rely on reputation.

They find a health-system brand with strong name-recognition, and negotiate to fix discounted prices for high-volume procedures.

When the bargain is struck, the hospital becomes a Center of Excellence, and the employer is satisfied to have found an economical healthcare solution.

But just how much money will the employer save?

If they failed to properly account for quality, the answer might be: zero.

Poor-quality care costs payers billions of dollars every year. That’s because underperforming providers can substantially increase the risk for adverse outcomes.

These lead to extended hospital stays and readmissions. In turn, these adverse outcomes can increase the cost for a single procedure – by an order of magnitude.


A procedure with severe complications costs almost 6x more than the same procedure with no complications. Source: Annals of Surgery.

That’s the financial risk of relying on reputation.

Dramatic as it is, this figure understates the true expense. It doesn’t even begin to account for ancillary costs. Extended stays and readmissions also mean employees will miss more work, and will take longer to reach a full, productive recovery. That’s a significant drain on any employer’s budget.

And that’s not to mention the toll in unnecessary suffering.


What should self-insured employers do instead?

Employers must understand the flaws in the typical approach to selecting Centers of Excellence. They can’t afford misguided analysis, or to rely on reputation.

MPIRICA is dedicated to helping employers understand the risks of partnering with the wrong facilities.

Our free white paper, 5 Steps to Select True Centers of Excellence, explores the issue in depth. You’ll better understand the scope of the problem, and more important – you’ll learn about important considerations, such as how to use data-based criteria to evaluate high-quality, cost-effective providers.

Request the whitepaper now, and find a way forward for your company.