It’s common knowledge that the US healthcare system is the priciest in the world. Some healthcare systems are testing new financial models to see if they can squeeze more efficiencies beyond the status quo. Warranties.
Geisiniger Health System in Danville, PA ,made news with warranties for cardiac surgeries. They now include warranties for hip fractures, as well as total knee and hip replacements.
Virginia Mason Hospital in Seattle recently announced they would provide warranties to privately insured patients undergoing joint replacement surgeries.
And Hoag Orthopedic Institute provides a warranty for knee replacement.
What does a warranty mean?
If a patient experiences one of a list of complications post-surgery, the patient (or their carrier) will not have to pay to fix the problem. The time period varies from 30 to 90 days. Examples include wound infection, blood clot, or hip dislocation. If there’s a defect in the implant itself, that cost would generally be the responsibility of the manufacturer. The patient experiencing the complication must receive the “repair” at the same hospital the procedure was done. Warranties would not cover repair done in a different system.
Warranties may be found with bundled payments; another model being tested.
Warranties are more likely to be seen in institutions performing high volumes of a particular procedure. There, the institution will have a good idea as to the real cost they incur by guaranteeing to repair specific complications. The upside is that warranties are a signal of quality. If an entity is constantly spending cash to service a warranty, they’d soon go out of business. So, a warranty is a marker that an institution stands behind its work. And warranties serve as a powerful marketing tool.
Many doctors in cash pay fields have long embraced various types of warranties. Plastic surgeons, for example, frequently perform revision surgery for patients unhappy with their aesthetic outcome. There, they waive their professional fee. Some will also waive surgicenter and anesthetic fees. Such programs make financial sense only if the surgeon – or healthcare system – understand the frequency of complications and the cost of addressing those complications. In all industries, signals of higher quality enable premium pricing. It will be interesting to see how broadly warranties can be implemented in healthcare.
I predict that surgical warranties, even if a powerful model for personal advertising, remain infrequently used. I noted from the article that there are significant limitations to the coverage time, and as pointed out by Medical Justice, often surgeons will provide “corrective” services post op to try to prevent lawsuits…anyway.
All surgeons can point to procedures they often do that turn out well in the majority of cases. For podiatrists that would be hammertoe correction and of course repair of ingrown nails. I myself had a couple of reoccurrences of ingrown nail surgery that were supposed to be “permanent.” I think the procedure was performed properly as I watched some of it being done on me. The Kaiser podiatrist repeated the procedure a year later at no cost. He was very well trained in lower leg and ankle surgery and was board certified. I was not angry about this. It happens.
So, in a sense it was warrantied. I predict that this model of guarantee is more common and will remain more used than written guarantees.
Another problem with written guarantees is even if the “wording” on the contract is for a limited period of time, patients will avoid that temporal thinking and conclude that the promise was permanent. That can never be. It could back-fire if the warrantee is refused for time considerations. That could make patients even angrier.
When I get a pizza coupon in the mail from Pizza-my-heart near where we live (great crust, great pizza), they are marked with a time limit. But they also told me they will always honor them. They always do. I have never had one refused, even if a year or two old. It’s good business and after all…it is only a pizza.
If you’re going to do it at all, you might as well make it a permanent guarantee, because that is what patients will ultimately expect when they see the form.
Michael M. Rosenblatt, DPM