Faced with year-over-year cost increases and less control over quality of care, Troy Simonson and his colleagues at Twin Cities Orthopedics launched a novel initiative in 2012 that bundles the financial and clinical components of common orthopedic procedures.

The program is an example of how independent physicians are seeing changes to their field and harnessing the potential for change to improve the patient experience.

Called Excel, the all-inclusive orthopedic service provides patients a flat pricing fee, a nurse practitioner who coaches them through the experience, a well-appointed recovery suite and rehabilitation. Excel covers pre-op, surgery and 90 days post-op. The cost of knee replacement surgery is a flat $21,000 fee, and hip replacement costs $24,000. That’s roughly a third off the going rate for traditional joint replacement.

“To remain competitive, healthcare providers must respond by being transparent about their clinical outcomes and the prices they charge for care.”

Excel is proving effective in lowering costs, maintaining quality and improving patient satisfaction.

“It wasn’t rocket science by any means,” explains Simonson, CEO of Twin Cities Orthopedics. “It was getting the physicians in a room, helping them build a protocol and moving forward.”

Transparency on price, services and quality are all core components of the Excel program. Simonson says consumers are increasingly demanding this information that for decades has been a black box in healthcare.

“The healthcare industry is becoming more competitive as patients are becoming more engaged with their care and better educated healthcare consumers,” Simonson says. “To remain competitive, healthcare providers must respond by being transparent about their clinical outcomes and the prices they charge for care. Those that don’t will be out of business sooner rather than later.”

Bringing health plans on board with the single bill took a little more effort, but today most insurers in the region participate. Patients appear to like the program, with a 10 out of 10 satisfaction rate.

Twin Cities Orthopedics has faced criticism for Excel, with some saying that it cherry picks the healthiest patients, artificially lowering costs and quality metrics. Simonson welcomes these comments.

“What’s wrong with taking a subset of population that you can drive down the costs by 30% to 35% doing it in a different model?” he asks. “I don’t see anything wrong with that compared with taking the same population and fitting them with everyone else and driving the costs up.”

With the expanding trend of hospital-employed physicians, independent physicians and physician groups must innovate to stay relevant and competitive, he adds. McKesson customer Twin Cities Orthopedics has 85 physicians in metro Minneapolis, 25 locations and more than 800 employees.

“Independent physicians are entrepreneurial,” he says. “They’re clinicians as well as business people and when you put those two together, it’s a pretty powerful thing to see.”

Physicians should take the reigns and innovate or they will take a back seat to reform, Simonson advises. “We could definitely sit back and take the approach of ‘Let’s see what happens,’” he says. “Well, if you take that approach, as one of our physicians says, you won’t be sitting at the table, you’ll be on the table.”

Innovator Insight: Those seeking to innovate in healthcare should start with identifying a source of frustration for patients and coming up with strategies to eliminate those sources of frustration. Your patients will thank you and your business will improve.