General Electric Co. has selected New England Baptist Hospital as a preferred provider of hip and knee replacement surgeries for its employees, a new twist in the efforts by big companies to control health care costs.
The agreement, one of the first of its kind for a Boston hospital, allows GE to contract directly with the hospital instead of going through a health insurer.
Under the arrangement, GE will waive out-of-pocket costs and cover travel expenses for any employee who chooses to have hip or knee surgery at the hospital in Boston’s Mission Hill. The deal may be most appealing to GE’s roster of about 5,000 employees in Massachusetts, but it will be open to all of GE’s 100,000 workers nationwide. The industrial giant relocated its headquarters to South Boston from Connecticut in the summer.
GE, starting with a 2013 deal with the Hospital for Special Surgery in New York, has named six other preferred hospitals for joint care in other states. It has a similar arrangement with a health system in Ohio for maternity care, and it is looking for additional hospital partners.
Virginia Proestakes, GE’s program leader of health operations, said the company can save money by directing employees to high-quality hospitals. “There’s less chance of complication, less chance of a redo, the employee gets a better outcome, and GE gets lower cost,” she said.
New England Baptist is known as a high-quality provider of orthopedic care. It is independently run but has clinical ties to Beth Israel Deaconess Medical Center.
This is the first contract of its kind that Baptist has signed with such a large employer, said Trish Hannon, the hospital’s chief executive. “We are prepared and we are eager for any GE employee, should they choose to come to New England for their hip and knee replacement surgery,” she said.
GE and New England Baptist have negotiated an emerging model of health care payment called a bundle: one payment that covers a suite of services associated with a procedure over several weeks or months. For joint-replacement surgery, that includes pre- and post-operative care, anesthesia, and follow-up appointments. The GE-Baptist agreement covers a 60-day period.
“If there’s any complication [within that period], there’s no other charge to GE,” Proestakes said.
Bundled payments give hospitals incentives to provide services at a lower cost by better managing a patient’s care and trying to prevent complications and readmissions, said Robert S. Kaplan, a senior fellow and professor emeritus at Harvard Business School who studies health care payments.
Other large employers — those with tens or hundreds of thousands of employees — have cut deals with hospitals that are similar to GE’s arrangement. They include Boeing Co., Wal-Mart Stores Inc., and Lowe’s Cos.
“GE is moving in this direction the way that other large employers are,” Kaplan said. “They’re looking for these hospital centers that are high-volume and excellent in doing medical procedures. It’s significant now that GE has moved its headquarters to Boston. They have a lot of lives covered in this area with existing employees and retiring employees.”