Revenue in U.S. hospital based outpatient wound centers: Implications for creating accountable care organizations

Background: One of the experimental health care payment and delivery programs proposed under the auspices of the U.S. Center for Medicare and Medicaid Innovation is the Accountable Care Organization (ACO). An example of this is the physician hospital organization (PHO), an association of one or more hospitals and a group of physicians which would “bundle” their payments for an episode of care. However, as potential PHO members consider such joint ventures, they require real-world revenue data from which to determine the relative contribution of the physician and the facility to the collective bill in order to make decisions about the contract structure. In the past, physicians and hospitals have not shared cost and charge data with each other. Methods: Using sophisticated electronic medical record software, real-world billing data were obtained from 3 hospital-based outpatient wound centers and the physicians practicing in them (1 full time equivalent each) in order to establish the relative contribution of each entity to a potential PHO. Results: A total of 6,762 patient visits occurred, comprising 887 initial consultations and 5,875 follow-up visits. Based upon Medicare-allowable reimbursement rates, mean physician revenues represented approximately one quarter of total revenue while procedures provided almost three quarters of the global revenue, on average. Conclusions: Among hospital-based wound centers our results confirm that procedures represent the majority of revenue for both the facility and the physician. Our results represent a starting point for hospitals and physicians to negotiate bundled payments as they attempt to transition to a value- and quality-based model of care. A sophisticated EHR designed specifically for the purpose of capturing charge data, provides the mechanism for future cost effectiveness studies.