New Marketplace

Surgical Value — Beyond Bundled Payments

Article · October 30, 2018

Surgeons can create value along the entire procedural episode in each of the four phases of care: from preoperative optimization, intraoperative care, postoperative hospitalization, and post-acute/post-discharge care. Episode-based payments, such as the Comprehensive Care for Joint Replacement (CJR), create incentives to reduce waste and improve care during these surgical events. While bundled payments hold promise, they are limited in what they can achieve. To truly harness the power of surgical care to improve value, we need to focus the effort of the surgeon on the whole population.

Why? Because great surgeons have impact that goes far beyond the specific surgical episode. But we have seen too little attention paid to this kind of approach. The latest data on surgical engagement in Accountable Care Organizations (ACOs), which were formed to take responsibility for the costs and the well-being of an entire population, is disheartening. Most ACOs are paying too little attention to surgical care. Indeed, beyond the lack of attention, there is substantial variation in surgeon leadership within ACOs, and governance and surgical care are too infrequently addressed in ACOs’ strategic plans.

Given that specialty care is a major driver of health care expenditure, this omission seems shortsighted. Here are three strategies for value creation by surgeons that go beyond bundled payment.

Make Decisions Based on the Big Picture

While good surgeons know how to achieve good surgical outcomes, great surgeons know when not to operate at all. “Going upstream” to prevent unnecessary surgical interventions occurs too infrequently and is often seen as the job of primary care physicians. But some leading health care providers are taking a very different approach. The CORE Institute in Arizona, for example, has a capitated contract to provide musculoskeletal services for a population and has seen costs reduced dramatically through a decrease in surgical intervention rates and a focus on conservative management. Surgical expertise applied to what are usually problems managed by primary care physicians has meant that surgeons can intervene before surgery becomes unavoidable.

Some surgeries, even when clinically reasonable, can be avoided through shared decision-making, where patients understand the likely risks and benefits of different approaches to clinical problems. The data suggests that under shared decision-making, patients often opt out of surgical procedures because of their values. Too little of the policy attention has focused on shared decision-making (only one of the 33 ACO quality measures includes shared decision-making).

Regardless of the effect on cost, or utilization, a high-quality surgical decision is arguably a surgeon’s most important role and should be grounded in a medical diagnosis as well as a preference diagnosis — “an inference of what the patient would choose were they sufficiently confident and well informed to decide on their own.”

Eliminate Low-Value Services

A second approach that surgeons can use to reduce waste is to focus on truly necessary services. Surgeons can continue to work with payers and clinical commissioning groups to define high- and low-value services and procedures for the population, e.g., asymptomatic inguinal hernia repair, routine endoscopy in patients with uncomplicated diverticulitis. Medical management of many of the problems that were historically seen as only surgically fixable often generates results that are comparable. A great surgeon can work to eliminate the use of these low-value services across the health care organization.

Look at the Long Term

Finally, collecting and acting on longer-term outcomes data will inform decisions at the commissioning level, as well as at the clinician-patient interface, delivering care that simultaneously works for the patient, and indirectly, the rest of the population. Current bundled payment schemes tend to focus on the early postoperative period (the length of most bundled payments is 30 days, though for some, such as the CJR, it is 90 days).

This can have unintended consequences. For example, a cheaper prosthesis in total hip replacement may have equal short-term postoperative outcomes but a higher risk of long-term complications and adverse effects on functionality. High-value surgeons will think about the long run, and approach clinical decisions based on the best long-term outcomes. Bundled payments and other reform efforts should take these longer-term periods into account.

The surgeon has a crucial role in defining value for patients in a population — and not just when that patient is in need of the surgeon’s knife. Undoubtedly, a surgeon can improve value through patient preoperative optimization and surgical planning, intraoperative technical excellence, safe and timely in-hospital postoperative care, as well as appropriate levels of rehabilitation. However, improving outcomes per dollar spent will require a broader view of the integrated care delivery system — the quality of surgical decision-making, a focus on overall surgical intervention rates, working across clinical silos with expert teams at different locations, consideration of high- and low-value services, as well as the collection of, and response to, data on longer-term operative, and nonoperative, outcomes.

Call for submissions:

Now inviting expert articles, longform articles, and case studies for peer review


A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

More From New Marketplace
China's health care - global lessons at scale event information. Live broadcast April 25, 1-5 pm China Standard Time. Rebroadcast April 26, 1-5 pm ET.

Event This Thursday and Friday: China’s Changing Health Care: Global Lessons at Scale

Join us for our free livestreamed event Thursday from 1:00 – 5:00 p.m. China Standard Time (1 a.m. – 5 a.m. ET) and rebroadcast on Friday from 1:00 – 5:00 p.m. ET, hosted by Jiahui Health in Shanghai: China’s Changing Health Care: Global Lessons at Scale.

Health Care Snapshot - Chinese Health Care and U.S. Health Care

Perspective from the East: Health Care in China

Context is the key to understanding China’s health care system and its emphasis on population health.

GordonWang01_pullquote - digital health care China

Digital Health Care in China: Benefits and Pitfalls

China’s experience offers insights for integrating digital and non-digital health care services.

Dale04_pullquote_disrupting the value-based vs fee-for-service payment model

Disrupting the Payment Model

We should modernize our payment mechanisms to reflect the reality of our digitally enabled lives.

Percentage of Patients Choosing a Reference-Based Pricing Facility for Knee or Hip Replacement Surgery - 2008-2012 - value-based benefit designs

The Evidence for High-Value Benefit Designs

Innovative models are showing promise, but limited transparency and peer-reviewed research hamper expansion.

New Evidence on Stemming Low-Value and Overprescribing - Nudgind Physicians Toward Better Prescribing Practices

New Evidence on Stemming Low-Value Prescribing

New research suggests that deploying strong and surprising messages could help to address overprescribing of opioids and other drugs.

Wang01_pullquote medical devices - medical device innovation in China

Accelerating Medical Device Innovation in China

Promoting collaboration between clinicians, researchers, device-makers, and regulators.

Health Care Costs - Cost Transparency Is the Main Change Needed to Support Patients in Lowering the Cost of Care

Survey Snapshot: Is Transparency the Answer to Rising Health Care Costs?

NEJM Catalyst Insights Council members say that while transparency might be necessary, we have to change the way care is delivered.

Many Stakeholders Share Responsibility for Lowering the Cost of Care

New Marketplace Survey: Patients Lack Information to Reduce the Cost of Care

Efforts to mitigate rising health care costs have left most industry participants — patients, providers, and payers alike — frustrated at the lack of progress. While there is plenty of blame to go around, a significant open question remains: how responsible are patients for reducing costs?

Hip or Knee OA Care Management - Musculoskeletal Institute and Bundled Payment Program at Dell Medical

Bundled Payments Are Moving Upstream

Dell Medical School at The University of Texas at Austin has improved outcomes and reduced costs for musculoskeletal care with a multidisciplinary Musculoskeletal Institute and bundled payment model.


A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »


Vertical Integration and Bold Experimentation

Four points on improving value in health care via vertical integration and aggressive experimentation.

Value Based Care

203 Articles

Disrupting the Payment Model

We should modernize our payment mechanisms to reflect the reality of our digitally enabled lives.

Medicare and Medicaid

124 Articles

“You’re Old Without Hearing Aids”— Addressing…

Hearing loss isn’t a normal consequence of aging. But it is associated with a higher…

Insights Council

Have a voice. Join other health care leaders effecting change, shaping tomorrow.

Apply Now