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Geisinger CABG Warranty: A Worthwhile Experiment

MANAGED CARE January 2008. © MediMedia USA
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Geisinger CABG Warranty: A Worthwhile Experiment

As an idea, Geisinger’s ProvenCare program is a winner. What happens in the marketplace remains to be seen.
Michael L. Millenson
MANAGED CARE January 2008. ©MediMedia USA

As an idea, Geisinger’s ProvenCare program is a winner. What happens in the marketplace remains to be seen.

Michael L. Millenson

In 1912, this famous assessment of a medical milestone appeared in the New England Journal of Medicine: “A random patient with a random disease, consulting a doctor chosen at random had, for the first time in the history of mankind, a better than fifty-fifty chance of profiting from the encounter.”

Nearly a century later, the odds for at least some procedures seem to have soared closer to 100 percent. That, at least, is one implication of the Geisinger Clinic’s ProvenCare program [see cover story on page 16], a kind of health care warranty that has won international attention. For its first procedure, the clinic is assuming the financial risk of complications from coronary artery bypass graft (CABG) surgery. Those costs can average $15,000 per patient.

ProvenCare has been hailed as the opening of an era where the murkiness of medical outcomes gives way to the clarity of predictable results. Perhaps. First, though, it pays to read the fine print.

At its core, ProvenCare represents an implicit professional expectation repackaged into an explicit business promise. After all, thousands of surgeons truthfully assure tens of thousands of patients every day that their chances of a serious complication are quite small. What Geisinger has done is attach a price tag to that expectation for one well established procedure. Whether that represents a genuine value for consumers or a windfall for Geisinger depends heavily on the surgery’s cost and the warranty’s terms.

At Geisinger, three hospitals are charging a flat fee for CABG, plus 50 percent of the “historically expected” cost of complications during a 90-day period. One presumes this is a good deal for the Geisinger Health Plan, the first customer, but is it good for other insurers? How about a consumer with a high-deductible plan? What about a Medicare Advantage plan? The answer depends on the expected costs built into Geisinger’s price. As a rough benchmark, the risk of major infection within 90 days after cardiac surgery was 3.51 percent in an analysis of a national cardiovascular database in the journal Circulation.

Pricing questions notwithstanding, ProvenCare remains an extraordinary shift for a $2 trillion industry whose business practices seem only slightly advanced from the time when patients traded chickens for a checkup.

Complex initiative

Michigan orthopedic surgeon Lanny Johnson offered insurers a warranty on his laparoscopic procedures in the early 1990s, but the offer — an implicit rebuke to colleagues who complained ceaselessly about price — never caught on. ProvenCare, by contrast, represents a complex initiative involving large-scale care teams at multiple institutions.

Geisinger deserves praise for boldly asserting that the processes of care can be scrutinized and then routinized so that patients consistently receive evidence-based treatments that yield favorable outcomes.

In the marketplace of ideas, the Geisinger warranty is already a winner. What happens in the convoluted health care marketplace remains to be seen.

Michael L. Millenson, a member of the MANAGED CARE advisory board, is president of Health Quality Advisors and the author of Demanding Medical Excellence: Doctors and Accountability in the Information Age. He can be reached at mm@healthqualityadvisors.com.

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