Editor’s Note: We’re all familiar with the concept and the benefits of the ’empowered patient’. But what about the ’empowered physician’? Here’s an interesting tale of one surgeon taking charge of virtually every aspect of the care he delivers, including cost. The benefits to both he and his patients are quite clear. Editor’s Note: In December 2011 Johns Hopkins announced that PepsiCo, the world’s second-largest food and beverage business, would offer its employees the option to travel to Johns Hopkins Medicine (JHM) in Baltimore for cardiac and complex joint replacement surgeries. PepsiCo, which sponsors its own self-funded medical plans, will waive deductibles and co-insurance for those who elect to have their surgery at Johns Hopkins. The payment methodology for these procedures is a bundled rate — an all-inclusive rate for hospital and physician charges and certain preoperative testing — and provides payment for all patient care over the course of a clinical episode instead of paying for each service on a fee-for-service basis. Medical Travel Today recently spoke to Patty Brown, President of Johns Hopkins HealthCare LLC, about the relationship, how it evolved, and how medical

travel fits into the institution’s plans for the future. Medical Travel Today (MTT): How did the relationship with PepsiCo evolve? Patty Brown (PB): It was actually brought to us by Mercer. You may recall a few years ago Mercer brokered the Lowe’s-Cleveland Clinic partnership. In our case we got an inquiry from Mercer informing us they were working with Fortune 500 employer groups that were looking for creative mechanisms to manage care costs. One program being explored was the medical travel concept, specifically, a benefit within the employer offering to entice employees to travel to centers of excellence for procedures. MTT: Was this an inquiry specific to JHM or were they speaking with other institutions? PB: There are other providers involved in the discussion. Johns Hopkins is the second provider. It is likely that there will be up to five providers participating in a similar program, not necessarily with the same employers. There were actually two rounds of cuts. The first focused on quality, service, and cost. We had to share our quality and outcome scores for the clinical specialties being considered, and demonstrate the ability to meet specific customer service standards and preliminary pricing targets. The second round specifically focused on pricing, on whether or not we could propose a pricing structure that would be deemed attractive. We’ve been in bundled payment programs for 15 years so that really wasn’t a challenge for us, and we were able to respond quickly and authoritatively to ideas proposed related to bundling. Once it was determined we were a provider that could meet the requirements, the employer, PepsiCo, was then brought to the table. Conversations then focused on coming to terms on the categories of services to be offered. Ultimately we tied up all the details and here we are. Now the jury is still out on whether or not people will travel for care. Quite honestly we’re not privy to the messaging PepsiCo’s providing to employees, but from the consumer perspective it’s an interesting pitch. Basically, you have your employer stating you should travel for services that you could get in your own community. But Pepsi believes that driving employees to centers of excellence will result in higher quality, better outcomes, and ultimately lower costs. But it’s been a slow start. MTT: What would you say the timeframe from first discussion to final agreement was? PT: Just about 18 months. MTT: What was the principal motivation for developing the relationship with PepsiCo? To develop a new revenue stream or to counter a perceived threat from medical tourism? PB: No, it wasn’t in response to a threat. We’re always looking for ways to provide value back to customers, and we’re comfortable with bundled pricing so this was really a no-brainer. We like the idea of payment reform and the idea of employers taking that issue on themselves. It made sense to us that they create a direct conversation with a provider rather than go through insurance companies as has always been done in the past. The big question for both providers and employers is what’s the best way to manage care costs. It’s clear that everyone is now actively looking for new ways to answer that. And regarding the PepsiCo relationship, we don’t actually expect a lot of volume from it. This is more about being open to new payment models and achieving goals for both ourselves and our partners. Johns Hopkins is interesting in that we’re a provider, as well as an employer, and a health plan. We’re very aware of all the considerations that go into creating models for care. MTT: That’s very interesting. Does your engagement in this then suggest that Johns Hopkins sees medical travel, domestic and abroad, as a viable option for employers and consumers? PB: We don’t have a specific opinion about whether or not this is a good idea. But we are clear a national and international referral center. We have the ability to be open to patients from around the world. We facilitate a whole lot of international medical travel to us, and we also facilitate our know-how regarding traveling to other locations or destinations. In looking at the PepsiCo offering, we didn’t have a specific opinion about whether or not it was appropriate or desirable to offer travel benefits. In some instances we actually discouraged them to not offer specific diagnoses. For example our physicians didn’t feel it made sense to travel for certain types of care, like spinal procedures. Our physicians were concerned about post-procedure follow-up care. That then becomes very relevant from a quality perspective. All that said, we certainly do compete in the national market for patients. We’re out there advertising in airports and magazines encouraging people to come see us. But whether or not it’s a good thing, I don’t know that we have an opinion on that. MTT: Are you currently pursuing other employer group relationships? PB: We are. We have been contacted by several employers who want to have conversations. It is a bit unusual to have them reach out directly to us, but that’s where things are at this time. We’re currently in discussions with one group on the same scale as PepsiCo. We haven’t signed a similar deal and aren’t quite sure if they’re looking at expanding their network or adding travel to their offerings. I don’t think they’re quite clear yet. MTT: How does domestic medical travel fit into your business plan for the next five years? PB: As a delivery system we have plans to increase domestic and international medical travel care. It’s not something we’re planning to market directly to employers. The consumer-directed marketing we’re currently doing is working well. I anticipate we’ll stay that course. About Patty Brown Patricia M.C. Brown, Esq., is president of Johns Hopkins HealthCare LLC and senior counsel for The Johns Hopkins Health System. As president of Johns Hopkins HealthCare LLC, a managed care organization owned by the Johns Hopkins Health System and the Johns Hopkins University School of Medicine, she is responsible for the administration of all Johns Hopkins managed care products for over 300,000 individuals enrolled in self-funded employer, Medicaid, and Department of Defense health benefit plans. Ms. Brown is also responsible for integrating and coordinating managed care contracting, payer, and market strategy for all Johns Hopkins Medicine entities, including The Johns Hopkins Hospital, The Johns Hopkins Bayview Medical Center, Howard County General Hospital, The Johns Hopkins University School of Medicine, and the Johns Hopkins Community Physicians. Finally, as senior counsel to the Johns Hopkins Health System, Ms. Brown provides legal advice in the areas of managed care and regulatory compliance.