Corporate America has come up with a new way to save money: Give employees free surgery.
Several large companies, including Lowe's, are offering workers access to major operations at no cost to the employee.
Recommended For You
They do it through "bundled payment" agreements with providers. The idea is that by paying a hospital a flat rate for not only the operation, but any subsequent care associated with recovering from the surgery, the employer saves money.
The idea is similar to recent moves by Medicare to reimburse hospitals based on the entire episode of treatment related to the operation, rather than for each test, medication or service that the provider confers upon the patient. It implemented the new system for knee and hip replacements this month.
The system is intended to encourage efficiency and better performance from the provider, which now has a greater incentive to make sure the patient recovers well from the surgery, since it will not get paid if the patient is later readmitted and requires a costly treatment.
"We were able to get a bundled price, which actually enables us to save money on every single operation," Bob Ihrie, senior vice president of compensation and benefits for Lowe's, told Kaiser Health News.
Ihrie came up with the idea in 2010, and had to tell dumbfounded colleagues that the policy was intended for every employee participating in the home improvement company's health plan, not just C-Suite execs.
The system is not simple, of course. Sometimes the company makes a deal with a hospital out-of-town, even paying for the patient's plane ticket. But that presents challenges later on when the patient needs further treatment.
Providers locked into bundled payment systems, unsurprisingly, are more likely to tell a patient that a surgery recommended by another doctor is not in fact necessary. According to Lowe's, that has happened in nearly a third of cases.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
