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
A Look at the Four Pillars of Primary Care

Pay for Relationship: A Novel Solution to the Primary Care Crisis

What society should and can pay for is care that enables relationships between patients and providers.

Examples of Stages of AI Technology Development and Diffusion

How Artificial Intelligence Is Changing Health Care Delivery

The development of intelligent machines holds great promise for making health care delivery more accurate, efficient, and accessible, but challenges remain for incorporating AI technology into clinical and administrative settings.

Recommendations to Resolve Information Asymmetry at the Strategic Level

Information Asymmetry: The Untapped Value of the Patient

The knowledge and preferences that patients could — and should — share with clinicians would restore balance to point-of-care interactions, leading to better outcomes and enhanced value.

Key Components for Health Care Systems to Address Patient Affordability

The Next Frontier in Reducing Costs of Care: Patient Affordability

To create meaningful point-of-care guidance so that patients can make informed medical and financial decisions, health system leaders and policymakers can develop interventions to address four major components of a proposed patient affordability scale.

Direct-to-Consumer Telemedicine Is the Biggest Coming Threat to Traditional Health Care Organizations

Survey Snapshot: Mega-Mergers and Telemedicine Accelerate Convenient Care Growth

NEJM Catalyst Insights Council members detail how providers are looking to direct-to-consumer telemedicine and partnerships to meet the differing needs of their patient populations.

Opelka01_pullquote - ACS IPU team-based surgical care bundles playbook

Developing a Playbook for IPU-based Surgical Care and New Payment Models

The complexity associated with most surgery lends itself to the integrated practice unit structure, with its focus on the care team and value-based payment.

Convenient Care Has Been Good Overall for the Health Care Industry

New Marketplace Survey: Convenient Care — Opportunity, Threat, or Both?

A survey of the NEJM Catalyst Insights Council shows conflicting views about both the value of convenient care and what respondents’ organizations should do.

Payer-Provider Partnerships Produce Better Quality Outcomes 3 - community health plan - physician partnership

New Research Shows How Payer-Provider Partnerships Can Accelerate Adoption of Evidence-Based Care

Five best practices that are replicable and scalable are facilitating improved clinical and financial outcomes today.

30-Day Mortality Rates at Non-Teaching and Major Teaching Hospitals 2013-2014 - value-based care at academic medical centers

What Value-Based Payment Means for Academic Medical Centers

Academic medical centers must become as dedicated to advancing operational and clinical efficiency as they have been to advancing the science of medicine.

Medicare Compared to Private Spending Cumulative Growth 2009-2019 - traditional Medicare coverage

Redesigning Medicare to Work for Everyone

A proposal to improve the Medicare benefit package.


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

Learn More »


Platforming Health Care to Transform Care…

Health care leaders need to focus less on ownership and control of the delivery process,…

Achieving Value in Highly Complex Acute…

To improve both the value and outcomes of ECLS, Cedars-Sinai Medical Center created guidelines for…

Build vs. Buy: What Should Health…

The consolidation craze continues, but vertical integration has yet to demonstrate real progress toward the…

Insights Council

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

Apply Now