Stryker rolls out joint replacement patient program to help hospitals appease CMS

3-D printed Triathlon Tritanium Knee System--Courtesy of Stryker

Orthopedic specialist Stryker ($SYK) is launching an internet-based program for patients to offer support from the time joint replacement surgery is scheduled until 90 days after. The move is aimed at enabling its hospital customers to better secure payment for hip and knee replacement by helping to improve their patient outcomes.

The Centers for Medicare & Medicaid Services (CMS) has started paying hospitals for hip and knee replacements as tied to patient outcomes--in one of the first real efforts to implement value-based healthcare in the U.S. The bundled payments requirement from CMS, known as the Comprehensive Care for Joint Replacement Payment Model (CJR), went into effect April 1.

"This new platform should play a big part in helping our hospital customers manage a patient's entire episode of care through CJR and voluntary payment bundles for 90 days and beyond," said Stuart Simpson, VP and GM of Stryker's Reconstructive Division, in a statement. "It represents another example of how Stryker is helping to facilitate the customer's understanding of the shift to value-based care."

Stryker itself has taken on risk-sharing deals with 5 institutions across several hospitals with a total of $55 million of sales. So, that means that the company itself is starting to have some of its own skin in the game.

The average cost of joint replacement, hospitalization and recovery ranges from $16,500 to $33,000 depending on geographic area, according to CMS.

The CJR Payment Model is being phased in gradually, with no financial penalties in the first year. In the second year the worst hospital performers will be required to repay up to 5% of their patient reimbursement, with 10% in the third year and 20% in the fourth and fifth years. The top performers will be paid bonus reimbursement that will be similarly phased in.

Stryker has been preparing for this sort of changeover for some time; it has a division called Stryker Performance Solutions that dates from 2009, which has been dedicated to working with hospitals to improve performance in areas directly impacted by these bundled payments. Rural and community hospitals are excluded from the mandates of CJR.

With the implementation of CJR, Stryker Performance Solutions is no longer able to work directly with hospital Medicare programs--but it is continuing to act as a consultant to them. As Stryker Chairman and CEO Kevin Lobo described in Stryker's April earnings call, "Through these engagements, we've developed deep insight into the profitability and opportunities that hospitals have within orthopedics. The initial focus is really much more on the post-acute care. That's where the majority of the cost of the procedure is and the biggest opportunity in the short term is addressing post-acute care."

The JointCoach program is currently available to more than 270 U.S. hospitals as they have implemented redesigned programs for total joint replacement patients.

"With this new platform, we have created a continuum of patient service that results in optimal care and positive outcomes," said Simpson. "We feel that it's a necessary advancement in the orthopedic space."

- here is the announcement