Can “Travel Practice” Help Cut Orthopedic Surgery Costs?

An Interview with Jim Polsfut, CEO of the North American Specialty Hospital.

Can you explain how the North American Specialty Hospital’s (NASH) “travel surgery practice” model works?

US employers now have the opportunity to offer the option of NASH in Cancun to their employees who are seeking improvements in quality outcomes for elective surgical procedures, such as a knee replacement, and at a much-reduced price. In fact, in terms of the cost to the patient, US employers generally eliminate the patient-pay portion altogether while covering the cost of travel to Cancun for the patient and a companion caregiver. Meanwhile, the employer anticipates that the employee will have a faster return-to-work and that the overall cost of surgery will be cut roughly in half. The NASH model is unique in that, while the destination city is in Cancun, NASH operates with US clinical protocols, US performance-based quality metrics, US surgeon continuous engagement, US malpractice insurance coverage, a facility with US hospital accreditation, and an attached US hotel.

How did this idea come about?

About five years ago, an orthopedic surgeon in Colorado, then serving as a team physician for the Denver Broncos, began discussing the idea of NASH with an entrepreneurial friend of his who had launched several start-up companies. I came on board to do a little market research, clinical groundwork, and financial analysis, and in fairly short order, the three of us recruited a few others to collaborate. Together we realized that the potential was significant for achieving very high levels of quality in medical and surgical care in Cancun at a much-reduced cost.     

How do employers and third-party administrators (TPAs) benefit from using NASH?

Today, most employers in the United States are self-insuring their health benefits rather than utilizing health insurance. Now more than ever, employers are increasingly frustrated by the lack of transparency in health care costs, the tremendous variation in those costs even when they’re incurred within the same metropolitan market, and above all, by the hyperinflated costs of health care procedures overall. NASH helps such employers, along with their TPAs and other intermediaries, to obtain a higher expected quality outcome for their employees at a much-reduced cost.  

Can you explain more specifically how a travel-for-treatment option would work for employers and employees in terms of cost?

In the United States today, even a negotiated, discounted rate for a total knee replacement may well exceed $45,000, $60,000, or more. Over time, separate bills will trickle in from the hospital, surgeon, anesthesiologist, laboratory, imaging department, physical therapist, and so forth. It’s all quite opaque and unpredictable, and certainly expensive. By contrast, NASH adheres to a bundled payment methodology whereby we provide just one bill for the entire perioperative cycle, from pre-op through post-op. And the sum for that bill will likely be about half of what would have been billed by the local hospital or provider. Those savings go directly to the employer and to the patient. 

The bottom line for employers: even after factoring in the cost of travel and accommodations for the patient and the companion, as well as waiving deductibles and copays, the savings are significant.

Have you begun to treat patients?  What does the data look like coming out of your initial experiences running the program?

Following five years of laying the groundwork, including the establishment of comprehensive clinical protocols and the recruitment of an initial group of rotating US physicians, NASH began to treat its first patients in October, 2016. Just like in the advanced hospitals in the United States, NASH has completed its joint replacement surgeries in just 60 to 75 minutes and with the same rigorous attention to infection control. Just like in the United States, our patients have begun to walk after only 4 or 5 hours post-operatively, and they’ve been discharged after only one night in the hospital.  

What types of procedures does NASH specialize in, and do you plan on offering more procedure types in the future?  

NASH began with an initial focus on total joint replacements, particularly total knees and total hips. We did so because these procedures are elective, such that the scheduling of them isn’t urgent, and because in the United States, these procedures are very numerous, very expensive, and very inconsistent in terms of quality outcomes. In other words, with regard to total joint replacements, NASH adds a great deal of value, both to the patient and to the employer. Before long, NASH will expand its service offering to include spine surgery and, quite possibly, certain cardiology and oncology procedures.   

Surgery in a foreign country may conjure up the idea of lax safety regulations;  can you discuss the patient safety procedures in place? Are US clinical protocols in place?

NASH functions as a Center of Excellence in the Delivery of Healthcare, and surgery is performed at a Joint Commission International-accredited hospital.

NASH adheres strictly to US clinical protocols, US performance-based quality metrics, and US physician engagement. The incorporation of US malpractice insurance coverage underscores the adherence to quality. Our surgical and medical care teams practice continuous quality improvement and pay rigorous attention to safety issues which parallel and often exceed US standards. With US physicians engaged in each phase of continuous service, this model is vastly different than any other “travel-for-treatment” option located outside the United States.

While each of these factors is important, the clinical protocols, above all, dominate the effectiveness of NASH’s commitment to patient safety. A team of five US physicians, called the NASH Physician Advisory Committee or NPAC, oversees the approval of, and the adherence to, each of our clinical protocols. The NPAC must approve all instrumentation and supplies utilized by NASH. For example, only US-manufactured artificial joints are approved by the NPAC, including those produced by DePuy and Zimmer/Biomet.    

Can you discuss how NASH helps to lower the overall costs of a procedure?

In the United States, hospital facility fees, in particular, have escalated to vaulted levels of hyperinflation. For a routine hip or knee replacement surgery, the cost of one hour in the operating room and one night in the hospital might easily reach $30,000 or more.  Concurrently, costs for clinical supplies in the United States have escalated remarkably. By contrast, at NASH, facility fees are set at a reasonable level within our bundled payment fee, providing very high value in terms of quality over price. Clinical supplies, when purchased outside of the United States, are typically much less expensive. Away from the culture of the infamous $900 toilet seats in the United States, NASH is able to purchase the same US-manufactured clinical supplies as those in domestic Centers of Excellence, but at a fraction of the price. 

Can you anecdotally walk us through what a patient experience would be like?

Continuity-of-care is the hallmark of NASH. To illustrate this, a hypothetical employee named Bob who works for XYZ Company in Chicago learns from his primary care physician that he will likely need a knee replacement. Bob knows that, under the health care plan at XYZ, he can stay in Chicago for the surgery, but that the procedure will almost certainly trigger his maximum patient-pay portion, set by his health care plan at $5000. Instead, Bob chooses NASH, an option provided to him by his employer.  

To get underway, the concierge staff at NASH helps Bob to select one of several local NASH orthopedists who is US-fellowship trained and who rotates to Cancun periodically throughout the year. This local doctor evaluates Bob pre-operatively in the local Chicago clinic, accompanies him to Cancun for his operation in partnership with the local on-site medical team at NASH, and treats him post-operatively back in Chicago upon his return.  As a result, Bob receives excellent medical care, and his out-of-pocket cost for the procedure is zero.  

While in Cancun for a week or so, Bob and his wife, as his companion caregiver, stay comfortably and conveniently at a hotel, directly attached to the hospital, paid for by his employer, along with the cost of airline travel.    

Is there anything else you would like to add?

One more word about Cancun. To maximize both safety and comfort, NASH looked for a familiar location where it’s quick to arrive and easy to enjoy. Cancun certainly fits the bill. Direct, nonstop, year-round airline service to Cancun is provided, price-competitively, by multiple airlines from most major airports throughout the United States. Once a passenger has arrived, Cancun offers more than 100,000 hotel rooms, English fluency, an easy-going, tropical atmosphere, and a reputation for excellent customer service. NASH is proud to offer its services in Cancun, and we welcome the opportunity to speak with any self-insured employer in the United States about how to include its employees within the NASH program.