Is Your Hospital Ready to Create a Center of Excellence Program for Direct Contracts with Employers?

Center of Excellence programs are medical (or dental or behavioral health) programs that offer eligible participants insured by their employer for Covered Services supplied by designated Center of Excellence hospitals for selected program procedures. Hospitals and clinics selected as Centers of Excellence provide quality care with high patient satisfaction while saving money for the member and the shareholders of the corporate sponsor of the health or medical or dental plan. 

Please don't automatically assume that the COE program is identical to the CMS Center of Excellence program description for Medicare beneficiaries. This COE designation is ultimately described by the employer or the hospital in contractual terms rather than regulation. This affords all stakeholders flexibility to create COE programs that are data driven, use unique population health information about the specific group of employees and dependents covered under the program, and incorporate data from past claims history and expenses and forward-looking predictive modeling data owned by the employer.

That being said, if your hospital is a COE designee under the CMS program, it may be a feather in your cap that is appealing to many corporate buyers.

Let's first define the basics of the term:

A center of excellence (COE) usually involves 7 basic elements:

1. a designated team of healthcare providers
2. working at a specific healthcare treatment or diagnostic facility
3. that has been recognized as a reputable branded healthcare organization, department, or other competency or capability entity
4. that is accredited by a recognized accreditor
5. that provides leadership, best practices, research, excellence in outcomes and patient satisfaction, access, and support and/or knowledge transfer and training for a focus area or healthcare expertise or specialization
6. the team uses evidence‐based protocols to deliver value and a high quality of care, and has
7. has experience and the fully-developed infrastructure to accommodate patients who will travel to the COE from outside the local catchment area or region

Of these 7 listed fundamentals, the 7th is the single most challenging for many hospitals to meet because many hospitals and integrated health delivery systems in the USA and abroad have the other six... but they generally work with local patients and are designed down the the patient room design and layout for local patients. Patients whose visitors go "home" after visiting hours and patients who don't bring suitcases that must be stored someplace during their confinement as an inpatient.

Today's article focuses on health system readiness to do business as a COE for self-funded and self-insured corporate or union health and welfare benefit plans, based on the strength of program infrastructure that has been designed, developed, tested and is ready to accept patients under pre-negotiated, bundled case rates for episodes of care.

Over the past 22 years, I've been working on projects for healthcare providers and self-funded or self-insured employers with health benefit programs organized under Employee Retirement and Income Security Act of 1974 ("ERISA") and the Labor Management Relations Act of 1947 ("Taft Hartley Act").

For me, Direct-with employer and Direct-with-Union contracting started as an expansion of my managed care contracted reimbursement consulting combined with my work developing IPAs, PHOs, MSOs and ACOs around the USA. Back in the 1990s, employers and unions were already frustrated with insurers, HMOs and PPOs and wanted to cut or reduce the "middleman" cost layer and program administration costs out of their health plan expenses and they came to me for help. At that time, we used the terms "medical" or "health" travel instead of "medical tourism".

No one would have ever imagined back then that the media and later in 2007, the Medical Tourism Association would turn it into a "thing" that is the subject of so many industry conferences and revenue generating exhibitor stand rentals, revenue-generating advertising sponsorships, and dubious proprietary accreditations and certifications available for sale by a private consulting firm attached in some way to a not-for-profit trade association.

In 2009, I began developing the infrastructure for a Globally Integrated Health Delivery System? and was awarded a trademark registration by the USPTO in 2010 ( after repeated defensive filings to explain how it was not an HMO or PPO or something else that already existed in the market) on the new term of art to define that infrastructure on a globally integrated scale for health tourism and medical travel.

To build these Center of Excellence programs, I leveraged my clinical training and experience as an OR nurse, my revenue cycle knowledge of having worked in hospitals as a manager and staffer in the billing office and as a consultant troubleshooter to hospitals and health systems throughout the nation and in 115 other countries. I also leveraged my experience having served as project coordinator and consultant and then Executive Director pro tem of several IPAs, PHOs, and MSOs since 1993, and my experience as a health plan contracts negotiator and provider relations department manager or director. I used my health law paralegal training and special additional training and study of healthcare antitrust and other compliance matters to work with some of the best and brightest legal minds in the USA to design, launch and operate these integrated health entities who would create Centers of Excellence.

That should give you some indication as to my competency to write about and guide clients in the development of Center of Excellence programs as they relate to those 7 basic elements I listed above.

In 2005, I began consulting internationally on medical tourism program development for destinations, governments, hospitals and health systems, and private clinics. That's what ultimately gave rise to the identification of a need for a Globally Integrated Health Delivery System?. In fact, it was in Thailand that I first heard the term "Center of Excellence" take hold in marketing and advertising and branding parlance.

I took exception to the use of the term without substantiation by marketers who decided that a little "puffery" used to express subjective rather than objective views of what they offered wouldn't hurt anyone. My objection was met with resistance and a demand to see where the term "Center of Excellence" was defined, applied and accepted universally. Actually, it wasn't.

I knew what a COE was and what it took to build one, but I was forced to accept that there wasn't (and still does not exist) a universally accepted basis to point to at that time other than the CMS standard, which was not universal. A tough lesson for a consultant. A lesson that many in medical tourism have yet to learn. Center of Excellence is a term bandied about by many marketers in medical tourism.

What I have learned is that Center of Excellence is defined by the customer. It is their reality that determines if the supplier is or is not a Center of Excellence. If it isn't, but markets itself as such, the customer silently rebukes the misapplication of the term by walking away and refusing to do business with the supplier. The trust is immediately eroded on deeper inspection and determination that the marketers definition of "Excellence" isn't relevant to their needs and business requirements.

In time, I realized that I didn't need to be the "COE police of medical tourism." The marketplace would do that all by itself and rebuke those who exaggerated their puffery claims of "Excellence" and refuse to do business with them. I also realized that my best value proposition as a consultant was to help providers and corporate health buyers to collaborate to design, build, launch and operate relevant Center of Excellence programs, the necessary program specifications and documentation, and the infrastructure to operate them.

Many medical tourism consultants talk or blog "about" the topic. Very few, worldwide can point to practical experience actually "doing" the work they talk or blog about. And even fewer can point to 22 years of experience. Most of the medical tourism consultants out there are inexperienced in the development of any health delivery infrastructure - the majority come from marketing, branding, and advertising domains. They identified a nascent industry opportunity to niche focus on an area that most generalists haven't really ventured. Their input is valuable after the infrastructure has been developed.

Before the infrastructure has been decided, developed, tested and otherwise prepared to do business there really isn't much to market or advertise, is there. That would set the supplier back to the "puffery" category - especially in the category of "Center of Excellence."

Why? Because the term excellence is defined in most dictionaries as "the quality of being outstanding or extremely good." For that, one must have outcomes data and statistically significant volumes that were sampled to declare that state of "being" outstanding, rather than "aiming or aspiring to be" outstanding. The term comes from the Latin verb "excellere" taken to mean "to surpasses the norm."

Accreditation Alone is Not a Euphemism for "Excellence"

If you are going to claim that you surpass the norm, accreditation isn't the cognate. That's because "accreditation" is a system whereby external auditors come and make an inspection survey to determine that your operations and quality are equal to the average standard of care of the community in which similar services are delivered. So accreditation would be a tic in a box as you see listed in #4 of my 7 basic elements. To stop there does not equate to "excellence".

Excellence goes beyond accreditation, beyond "aim", and beyond "aspiration". Excellence is proven by externally validated data, metrics, and key performance indicators. But -- the KPIs must be relevant to the customer or they don't really matter.

So while marketing and advertising are premature, "branding" is not. When I see marketing campaigns that claim that "the hospital is a Center of Excellence that aims to blah blah blah" that's puffery plain and simple (and poor messaging). I say that because "excellence" is a provable, measurable state of being, not an aim or aspiration. Usually, I see this misuse of Center of Excellence in medical tourism advertising, website copy, and other promotional pieces by someone without careful English language writing skills. (It doesn't matter where they are or their native language because careful English language writing skills can be learned through education and training.) It is either poor skills and ignorance or intentional "puffery". There can be no other explanation in nature.

Branding, albeit a vague concept unto itself, is a practice in which a company or in this case, a healthcare organization creates a name, symbol, design or meaning, and a reputation and message that marketers and advertisers will eventually use in promotional campaigns. But to reach targeted customers who might respond favorably or convert to actual buyers of the product that is the subject of the campaign, the message about the product and the product itself must be "relevant".

In the process of developing a brand, the brand owner and/or its consultant(s) create personas of ideal customers at which targeted campaigns will be aimed.

So, what is a Center of Excellence for Walmart may not be the same as a Center of Excellence for Target or Proctor and Gamble, or Amazon, or Delta Airlines or PepsiCo.

Where Center of Excellence and Managed Care Contracting Intersect

The intersection of Center of Excellence and Managed Care Contracts is network shaping and narrow network design and implementation. Corporations and unions that offer a self-funded or self-insured health benefit plan seek to steer their plan participants to high value providers who deliver evidence-based care at a reasonable price.

Provider brands with higher actual or perceived quality and lower costs are typically placed in the most-preferred tier rankings. The best of breed are designated as Centers of Excellence in their focused area(s) of specialization.

How this occurs on a trajectory is that hospitals and health systems decide to pursue the strategy of Center of Excellence for one or more service lines. They call me in to discuss how to proceed in the selection and development of the COE. I make them step back and look at the data they already own but didn't realize they could use to start narrowing down their choices to a more manageable level. We couple the internal data points I specify from experience with data points from market research that also comes from experience. Each project is unique. There is no official template I use to do this. I tried, and believe me, it would be easier if it could be templated because then I could deploy an army of consultants to work with me, fetch what I need to interpret to write up the cookie cutter strategy.

In this instance, I work a lot like an architect does. Yes, you have engineering and regulatory code standards that govern certain aspects of the project and design, but every custom home you develop doesn't fit on the lot the same way nor do the homeowners want the same things. When you work with an architect on a custom home, you bring the architect your ideas, examples from magazines and Parade of Homes ideas you've toured, lists of things you want to avoid, materials you want to use, styles you like, and specifications for certain installations (foodie kitchens, master bath suites, indoor and outdoor entertainment areas and media rooms, and so forth), views you want to capture, and more. That's where your branding exercises also become relevant.

If you believe you are ready to create a healthcare Center of Excellence that will involve medical travel then you should be able to answer the following 15 questions. If you aren't you may benefit from working with me to develop your strategy, design and build the infrastructure and then start approaching possible customers.

1. Who will be the customer?
2. What industry are they in?
3. What work do their employees do and where do they do it?
4. Will this be for major medical healthcare or workers' comp or both?
5. Do their employees travel frequently? From where to where?
6. What as been their historic high spend areas of healthcare?
7. What does their predictive modeling reporting software indicate as their targeted areas that will become high cost and require containment or a different strategy?
8. How can the supplier hospital or health system align to meet the customer's requirements? What product should they build?
9. What is the health system brand's USP and where is their competitive advantage?
10. What can they turn into a Center of Excellence faster and at a lower cost to build with what they already have?
11. Is there revenue opportunity in that product? If not, what else might they consider? If nothing comes to mind, perhaps the most appropriate answer is "don't do it" or you aren't ready to move forward - at least not yet.
12. Will the revenue opportunity outweigh the cost to develop the infrastructure needed and to aggregate the volume data and other data to substantiate the claim of Center of Excellence beyond any reasonable doubt and allegations of puffery?
13. How will you choose which companies to approach?
14. What contract template will you use as a model or must one be drafted from scratch? (I've got one I use for clients.)
15. How will you set price ranges and inclusions for your bundled case rates?

Once potential customers express willingness to explore the possibilities with you, you'll have more to do to seal the deal as you customize each program, arrange site inspection tours, and working out bespoke pricing for your bundled services according to the bundles they want to buy and what inclusions they want or don't want from you.

I can help you with every step of the process and guide the marketing and advertising as well. The only part I cannot do is the surgery itself, but give me a Mayo stand and a back table, instruments, towels and towel clips, gloves and a gown and a mask and I can assist! ??