Bundled payments may work well for large organizations with bargaining power, but they’re not as easy to put in place for smaller companies.

Sach Jain, founder and CEO of Carrum Health, wondered why that was the case.

In searching for the answer to that question, he found the underpinning for his company.

Carrum Health aggregates data on its self-insured clients and negotiates bundled-payment contracts with centers of excellence on their behalf.

“Our ability to negotiate better prices with the provider is much better than a small employer’s,” Jain explained. Whereas large, self-insured employers— like Walmart and Boeing—have enough leverage to negotiate bundled-payment contracts with top hospitals, smaller employers typically lack the bargaining power, infrastructure and utilization to do the same.


Carrum Health

Founded: 2014

Headquarters: South San Francisco

Innovation: By bringing small employers together, Carrum can negotiate the kind of bundled-payment contracts large employers use to keep costs down.

Status: The company is looking to expand beyond the West Coast and will add service lines.

So Jain set out to create the volume.

“I thought that perhaps there was a way to scale these programs and make them more accessible to employers of all sizes,” he said.

Thus, Carrum Health was born. The cloud-based platform aims to streamline the bundling process for employers.

“Our solution is plug and play for employers,” Jain said.

Instead of the employers fending for themselves, Carrum Health handles the negotiation of bundled payments, contracting with centers of excellence for specific services, such as musculoskeletal bundles and some bariatric and cardiac procedures. The company eventually plans to expand to new service lines, including maternity, oncology and mental health. Before anyone undergoes a procedure, the center of excellence makes sure it’s necessary, checking documented evidence that other treatments have failed, and then Carrum initiates a third-party review.

The result of this work is sizable cost savings. Midsize employers—with 5,000 to 10,000 covered people—save about $5 to $8 per employee per month.

The company helps lower the price of procedures, which are 25% to 45% less than they would be for the traditional PPO population, according to Carrum. That could spell big savings: A joint replacement bundle that would cost about $40,000 for the commercial population might cost just $22,000 for Carrum Health’s population.

“Our ability to negotiate better prices with the provider is much better than a small employer’s.”

–Sach Jain

Outcomes are better, too. The average readmission rate among Medicare beneficiaries for total knee replacement is about 5.5%, whereas for Carrum’s surgeons, it’s just 1.7%, Jain said.

Among Carrum’s clients is Santa Barbara County, which began using the platform in 2016. The California State Association of Counties Excess Insurance Authority hired Carrum after looking into how to keep costs down with a strategy outside of standard wellness.

“When you tell people about it, most employees say, ‘What’s the catch?’ ” said Sidney DiDomenico, employee benefits manager for the state association’s Excess Insurance Authority. So far, she said, employees love the program. “The benefit to employers is lowering claims costs, and the benefit to employees is lowering out-of-pocket costs, and you get to go to centers of excellence.”

Right now, Carrum Health’s platform is available only for employers on the West Coast, but that will soon change, as the company begins expanding across the U.S.

Doing so will be tough, though, Jain said. “There’s a bit of a chicken-and-egg problem,” he said. If Carrum tries to bring on a provider in Texas, it will ask how many people Carrum represents in the state. And if Carrum goes to an employer in Texas, it will ask for Carrum’s contracted providers.

To get around that obstacle, Carrum is building its network from the West Coast outward. “That gives us leverage in new markets as we’re having discussions with providers,” Jain said.

Source

NO COMMENTS