Rethinking Specialty Care
Commercial healthcare spend in the U.S. is rapidly accelerating past $5 trillion. Nearly half of those dollars are driven not by routine checkups, but by specialty care — surgeries, oncology and complex procedures. For self-insured plan sponsors facing relentless double-digit annual cost hikes, the status quo PPO network is no longer working.
Brent Nicholson, Co-Founder and Chief Growth Officer of Carrum Health, a value-based specialty care platform, joined a recent episode of Moving to Value Unscripted to unpack how direct contracting, prospective bundled payments, and clinical quality curation can fix the broken economics of specialty care.
The EKG Effect: Why Fee-for-Service Is Broken
When employers analyze their historical claims data for standard surgical procedures—like a total knee or hip replacement — the price chart looks like an EKG. Prices swing wildly across town for the exact same procedure, with virtually zero correlation to clinical quality.
A self-insured plan sponsor might pay $25,000 for a joint replacement at one facility and $60,000 for the same procedure across town — picked purely because an employee followed a casual word-of-mouth referral. Traditional PPO networks keep employers on the hook for those wildly fluctuating fee-for-service claims without guaranteeing better outcomes.
Fixing the Value Equation: Quality First
Carrum Health’s model flips this equation on its head. Rather than acting as a traditional case-rate aggregator, Carrum focuses on the numerator of the value equation — quality and clinical appropriateness.
Granular Vetting: Carrum doesn't just hand out gold stars to entire hospital buildings. They analyze commercial claims, EMR data and physician-level performance down to specific procedure codes using sophisticated machine learning algorithms.
On-Site Inspections: Physical site visits evaluate the full clinical path — nursing care, infection controls and surgical workflows.
True Risk Sharing: Providers participate via prospective bundled payments paired with mandatory complication warranties. If a patient experiences a readmission or complication within the warranty period, the provider covers the care.
This model aligns incentives, compelling surgical teams to thoroughly mitigate pre-operative risk factors before taking a patient to the operating room.
Hard Dollars & Proven Outcomes
An independent RAND Corporation study published in Health Affairs validated the clinical and financial impact of Carrum’s Center of Excellence (COE) approach:
30% Surgery Avoidance: Almost one-third of candidates recommended for surgery elsewhere were redirected toward effective, non-surgical treatment paths after expert consultations at a Carrum COE.
80% Fewer Readmissions: Patients who did proceed with surgery experienced an 80% reduction in readmissions compared to peers in standard fee-for-service settings.
$16,000 Average Savings: Employers achieved a 45% unit cost savings, putting an average of $16,000 back into the health plan for every procedure completed through the platform.
The Market Shift: From Voluntary to Steerage
Years ago, employers relied solely on voluntary incentives — like waiving copays and deductibles — to encourage COE usage. Today, desperate times call for bolder moves. Employers are increasingly implementing carved-out specialty lines and hard steerage.
By partnering with a transparent, value-based specialty care network for high-cost care — from orthopedics to oncology and substance use — plan sponsors protect their bottom line, fulfill their fiduciary duties and deliver top-tier care to their workforce.
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