Orthopedics Destination Program Foundation Building: Clinical Variation Management

As discussed in our previous article, orthopedic services are a good place to look for innovation and transformation ideas.

• CMS’s removal of total knee arthroplasties (TKAs) and total hip arthroplasties from the inpatient-only list in recent years has precipitated orthopedic procedures moving to outpatient and ambulatory care settings.
• In addition, commercial payers continue to expand value-based reimbursement opportunities through bundled payment programs and risk-based contracts, further supporting the need to both reduce costs and improve orthopedic quality outcomes.

But lower costs and better outcomes are difficult to achieve when care processes aren’t standardized. One study found that when using a preferred vendor, total knee and hip implant procedures realized a 23% mean cost per case decrease.[1]Protocol-driven care that reduces clinical variation has been shown to improve quality outcomes across the continuum of ambulatory, inpatient, and post-acute settings. This supports the notion that reducing clinical variation is a vital strategy for addressing the current changes impacting orthopedic services.

Orthopedic leaders can use the six steps below to reduce clinical variation and elevate orthopedic service line performance on the way to building a destination program.

1. Establish Governance

Start with establishing a governance structure accountable for identifying variation-reduction opportunities and approving procedure-based best practices. Make strategic use of your existing quality committee governance structure(s) to support cohort-based clinical variation efforts led by physician and operational leadership dyads. The dyads will weave clinical variation design, implementation, and monitoring efforts into service line operations. Getting physician buy-in from the start is essential for clinical variation initiatives to achieve expected outcomes, so include orthopedic surgeons as dyad leads to complement nursing, therapy, case management, perioperative, supply chain, and financial leadership team members. This dyad approves changes to reduce orthopedic clinical variation and communicates with staff about how these efforts support your long-term orthopedic destination program objectives.

2. Shape Strategic Vision

Use your dyads to organize your clinical operations, supply, and financial teams around shared orthopedic service line goals. Dyad leads need to create plans and communicate the desired future-state vision. Ideally, cohort-based targets are focused on cost reduction, quality improvement, and other operational measures that can be weighted so you can better prioritize improvement efforts around clinical variation.

3. Categorize Cohorts

Don’t rely on coding classifications alone (i.e., ICD-10 and MS-DRG) to identify comprehensive patient populations. Some variation within coding classifications is warranted. For example, knee revisions receive the same billing code as an initial TKA, but the time, supplies, and expected patient outcomes are not expected to be similar between these two patient cohorts. Instead, expand your cohorting identification analyses to include patient comorbidities and factors such as equipment and supplies used and ancillary procedures performed during the orthopedic case.

4. Chart Value Streams

Ensure you are identifying clinical variation opportunities across the entire orthopedic care continuum for each respective cohort. Assess variation trends along specific care pathways by comparing resources (e.g., equipment, supplies, labor), care coordination processes, cost, and quality measures by orthopedic surgeon within each previously defined cohort.

One approach is to set an expected reimbursement or cost-per-case target based on the current lowest reimbursement rate or target price your organization is seeing for each cohort. Value-streaming activities can then be aimed at identifying cost-of-care reduction opportunities, in conjunction with potential quality implications, to achieve optimal standardized care delivery. This exercise allows your organization to capture additional margin by designing processes based on an anchor profile for specific procedures as you reduce clinical variation. For example, one study from the Journal of Arthroplasty found that implant costs were reduced by 16.7% and total knee component costs reduced by 11% for TKA procedures when standardizing care practices.^[2]

5. Prioritize the Most Impactful Opportunities

Now that you’ve identified orthopedic clinical variation along each respective care pathway within a given cohort, it is critical to categorize and quantify opportunities where the most meaningful impacts can be made. For example, altering product types, supply utilization, length-of-stay management, care coordination, and post-acute care setting preferences may not all produce the same level of orthopedic clinical variation improvements you’re aiming for. In addition, spend some time analyzing the codependencies of each opportunity. Will changing supply or drug utilization impact the length of stay? Will adding a pre-op lab test improve patient outcomes even if it may add to the overall cost of care? It’s important to obtain provider agreement on, and measure, evidenced-based protocol use. It is also vital to avoid looking at each opportunity in a vacuum. Prioritize changes to the areas along the orthopedic pathway that will have the highest impact.

6. Design, Change, Monitor, and Iterate Initiatives

Under the guidance of your respective leadership dyads, activate improvement teams made up of project management, administrative, financial, and clinical resources to minimize clinical variation within a specific patient cohort. These improvement teams will:

• Assess current-state performance.
• Design future-state processes and evidence-based pathways to reduce variation.
• Select transparent KPIs to monitor initiative results down to the provider level (including clinical pathway adherence tracking).
• Seek approval for people, process, and tool changes from your leadership dyads.

The cycle of improvement should be a permanent, ongoing effort across your orthopedic service line operations so variation is identified and addressed. By gaining buy-in from your governance structure, you’ve created sponsors and advocates willing to support your efforts to reduce clinical variation.

Regardless of how much leadership support you have, building a strong communication and education plan for all changes is essential to best manage change and realize optimal results. One way to further promote collaboration is to align incentive-based provider contracts to your clinical variation goals. Similarly, look for opportunities to bring your utilization, pricing, and related learnings into managed care contracting negotiations. In addition, ensure that your vendor partners are informed of your program goals and that they will be expected to collaborate with you to achieve them. Finally, continuous monitoring creates a constant “assess and iterate” cycle to always reduce orthopedic clinical variation.

Clinical Variation Management Forges Your Path toward an Orthopedic Destination Program

Reducing clinical variation is a catalyst for enhancing your orthopedic service line and establishing a long-term competitive advantage. Cost and quality control are essential to maximize margins that can be reinvested into your orthopedic destination program for items such as forming a digital front door and other consumer-centric services. As we’ve seen within the retail space, patients are displaying consumer loyalty patterns based on convenience, experience, quality, and cost when selecting their providers. A consistent orthopedic patient experience and care delivery process builds brand identity.

Published July 6, 2021