PepsiCo Makes a Deal to Send Employees to Johns Hopkins for Specialized Surgeries


PepsiCo’s self-funded medical plan will now waive deductibles and coinsurance for employees and dependents that elect to have cardiac or complex joint replacement surgery performed at John’s Hopkins Medicine in Baltimore.

The world’s second-largest soda company will pay for workers and their dependents across the country – nearly 250,000 workers- have the option to travel to Baltimore for these types of surgeries.  As an added benefit; PepsiCo will be covering the travel and lodging expenses for the patient and a companion.

In turn for sending patients their way, Hopkins will charge PepsiCo an all-inclusive rate for the  physician charges, preoperative testing  and other related services– this is instead of paying for each service on a fee-for-service basis. The only stipulation- the patient must be approved for the surgery in advance and be well enough to travel.

Hopkins has been bundling payments for years for various procedures; cardiac happens to be one of them. However, joint surgery is new avenue for them.  At Hopkins the bundled payments go into effect when there is a strong and engaged clinical team willing to work with this arrangement.

“We wouldn’t bundle anything that we didn’t have strong physician champions for, the outcomes so far have been demonstrable,” said Patricia M.C. Brown, president of Johns Hopkins Healthcare LLC. “It’s an easy thing to package, “she added.

Hopkins recognizes the chance to create new market opportunities by working with such a large employer.  But, there are other benefits for the hospital.

“We do not do this to create more margins; it’s an incentive to take advantage of these models to support the work that we are already involved in, “said Brown.  “The opportunity is to have a direct relationship with the employer and have a better understanding of what they are looking for, she added.”

Mercer Health & Benefits LLC, which brokered a similar deal for Lowe’s and Cleveland Clinic, they approached Hopkins about a year ago with this idea. Hopkins embraced the idea and is open to the possibility of implementing this model with other employers.

“We think they are win wins, and the sooner the better; people need to listen, the government needs to listen, all the payers need to listen,” said Brown. “This is exciting stuff.”

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