Medical Providers Put Together Bundled Approach

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The notion of paying medical providers based on the quality of their care instead of the volume of their services got a boost last week when Department of Health and Human Services Secretary Sylvia M. Burwell announced goals for implementing the shift at warp speed.

The move would mean shifting to “bundled payments,” reimbursing providers for a full hip replacement with a lump sum, for example, regardless of how many tests and procedures are associated with the replacement.

“I think everyone agrees this is the right direction to go,” said David Burkhart, a consultant with Point B Management Consultants’ L.A. office. “You should get paid more for keeping (a diabetic) person healthy than needing that person to have a leg amputated.”

The tricky part is that the new payment models are still being sorted out. The government started incentivizing doctors to form accountable care organizations that coordinate care in 2012, with the aim of reducing unnecessary hospital readmissions and costs. But that meant providers shouldered more risk, and Burkhart said the industry hasn’t quite worked out the right ways to work such models yet.

“I think the concern in the market is if we move really fast to this are we going to end up with a working system or do we need to try and learn our lessons from experiments in ACOs?” he said.

Torrance-based HealthCare Partners, which manages and operates medical groups and affiliated physicians in several states, already does much of what Medicare is suggesting, according to Dr. Dinesh Kumar, chief medical officer.

“We’ve grown mostly because we’ve been able to do what Medicare is beginning to see; to try not to pay for doing more, but (for) the right things,” Kumar said.

HealthCare doesn’t use all the models Medicare is suggesting, such as bundled payments, with its more than 600,000 patients in the L.A. area, he said. But the medical group already uses other aspects, such as ACOs, and Kumar doesn’t think the changes will have a negative financial impact on HealthCare’s business.

Some of the outcome might be out of doctors’ hands.

Dr. Martin Serota, chief medical officer at AltaMed Health Services Corp., a non-profit that provides primary care services in Los Angeles and Orange counties, said federal grants that AltaMed has received for serving low-income patients have helped as his group shifted to a single payment for many patients every month.

“It’s the scariest thing for a business, making a transition from one financial model to the next,” Serota said. “If you already have a system set up for managed care, then it’s just more of the same. … If it’s an entity that is built to perform best in a fee-for-service environment, then it can be a bumpy ride.”

Luck can play a big part, too.

“We’ve had a bad flu season, but it hasn’t put that many people in the hospital,” Serota said. But if it had, a virulent epidemic would’ve put a value-based medical system under greater financial risk. “If a new strain of flu, Ebola or avian flu virus hits, that could destroy your performance.”

Sleeping Beauties

Some people swear by their memory-foam mattress toppers or a down-filled featherbed for a solid snooze. Other more diminutive nappers, namely babies, might prefer Culver City firm Ubimed’s LifeNest, a mattress topper with a breathable hammock in its center.

Dr. Jose Bensoussan, Ubimed founder and chief executive, created the first LifeNest mattress topper because he was shocked by the death of a friend’s daughter due to sudden infant death syndrome 25 years ago. Many parents started placing sleeping babies on their backs to help prevent SIDS, but one byproduct was a flattening of babies’ fragile heads.

“I tried to find something which can help, and that’s how I came up with the idea of the LifeNest,” said the pediatric ear, nose and throat physician. He used to practice and manage a medical device company in his native France, but moved here nine years ago.

“For an entrepreneur, California is best place in the world,” he said.

The mattress toppers are marketed for preventing flathead and SIDS around the world, except in the U.S., where Ubimed is preparing a Food and Drug Administration application for the SIDS claim. The products are sold to hospitals, including Cedars-Sinai Medical Center, which uses them in its neonatal intensive care unit, and direct to consumers. The toppers, which are for infants up to 6 months old, retail for $130. Larger LifeNest mattresses for babies up to a year old, due to be released in April, will sell for $295.

Dipping Exchange Rates

Though implantable lens-maker Staar Surgical Co. is based in Monrovia, foreign currencies have been a real finger in its eye.

Staar announced last week that it’s anticipating disappointing fourth-quarter and full-year earnings due in part to about $600,000 in foreign currency fluctuations. Staar operates administrative and distribution facilities in Japan through a subsidiary, which reports its results in yen. Year-over-year fluctuations in the exchange rate between the yen and the dollar had a $3.8 million impact on Japanese sales in 2013, according to regulatory filings.

Staar is not alone in its currency woes.

Herbalife Ltd., the nutritional supplement company headquartered in downtown Los Angeles, saw pretax losses of $139 million in the third quarter due to foreign-exchange losses and asset write-downs sparked by the volatile Venezuelan bolivar.

Analysts have been speculating that Herbalife’s bumpy ride on the foreign exchange will continue when it announces annual earnings at the end of the month.

Staff reporter Marni Usheroff can be reached at [email protected] or (323) 549-5225, ext. 229.

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