Beyond the OR: Mandatory Bundles Under CMS TEAM

Episode Contents

• 00:00 — Introduction to The Surgical Journey
• 00:51 — Introducing Dr. David Shulkin
• 04:30 — Shulkin's Path from Physician to Health System Leader
• 08:45 — The Evolution of Value-Based Care in the U.S.
• 13:50 — Why Bundled Payments Emerged in Surgical Care
• 18:35 — CMS TEAM and the Shift to Mandatory Participation
• 19:30 — Why TEAM Matters Financially
• 19:42 — Are Hospitals Ready?
• 23:10 — Managing Outcomes Beyond the Hospital Walls
• 26:00 — What Hospitals Must Do Differently

Key Takeaways

Beginning in 2026, 780 hospitals will be required to participate in TEAM, a Medicare value-based care model that ties hospital reimbursement to outcomes across the full surgical episode — including the 30 days after discharge. Dr. Shulkin explains why this shift from voluntary to mandatory bundled payments could fundamentally change how hospitals manage surgical care.

Transcript

Welcome to The Surgical Journey, a podcast about putting patients at the center of surgical care. From preoperative readiness to recovery at home, we talk about the real processes and data that shape outcomes. Each episode features conversations with health system leaders, surgical teams, and technology experts who are changing how patients move through surgery and recovery. At NovaNav, we focus on making surgery easier for patients and their care teams.

That means clearer communication, reducing administrative burden, and smarter use of data. In this series, you'll hear how that work plays out in real clinical environments. Let's get into the conversation with our host, Lisa Miller. Welcome to The Surgical Journey podcast.

Today, we're really excited. We have both our CEO and founder, Amrit Kripalani, as well as very distinguished guest, Secretary Shulkin. Welcome both to today's podcast. Thank you.

I appreciate your assistance, Secretary Shulkin, in joining the podcast today. On this podcast, we focus on surgery, not just a moment in time, but as a journey. What happens before the procedure, what happens after discharge, and how those moments shape outcomes for patients and accountability for health systems. Too often, success in surgery is still defined by what happens in the hospital, even though the greatest risks and costs show up once the patients return home.

Today's conversation is about leadership, innovation, and what it really takes to manage those outcomes across a full surgical journey. As I welcome Secretary Shulkin, he's joining us today as a physician executive whose career spans clinical care, hospital leadership, public policy, and national health system transformation. Dr. Shulkin served as the ninth Secretary of the United States Department of Health Veterans Affairs, and previously Undersecretary for Health, where he led the VA administration, the largest integrated health system across the country.

In those roles, he was responsible for quality, safety, access, outcomes across millions of patients, and the system accountable not just for episodes of care, but for long-term recovery and well-being. Before his federal service, Secretary Shulkin was a hospital CEO, CMO at major academic and community health systems, including serving as president of Morristown Memorial and other systems. He's a national voice on value-based health care, and he's also the author of It Shouldn't Be So Hard to Serve Your Country. Today, we're going to explore about leadership, incentives, innovation, and reshaping the surgical journey for patients and systems.

So a lot that to say, welcome again. We're going to jump in and ask you the first question. So you've led some of the most complex health systems in the country. When you think about surgical care, what do outcomes or where do outcomes most often break after the patient leaves the hospital, right?

So that's always the concern. So where do they break, and why do health systems consistently underestimate that phase of the journey? I think that it's natural to understand and to want to control the environments that you're responsible for managing. And so most of the surgical processes happen either in inpatient environments or ambulatory surgery centers, and those are very controllable environments.

In fact, in surgery, more controllable because you often put the patient to sleep, so they're paralyzed, and you really control everything. But once they leave the hospital, it's a whole different world where hospital administrators, physicians have very, very little control, very little insight. And that's often where care can break down or things happen that aren't fed back to the clinical team so that they're not aware of them. And the idea of having a post-op check either a couple days afterwards or a couple weeks afterwards clearly is only a moment in time and doesn't represent full picture of what's happening.

And so these types of blind spots where people feel like they have control of the environment, but when the patient is far away from their control, they don't, it's really difficult in healthcare to have a good understanding and have any ability to influence what happens outside those environments. And that's often where a lot of patients get in trouble or things happen that are unanticipated and outcomes can be affected the most. Right. And that's what we see, you know, and we've been talking to many administrators and surgeons as well, that that's really, I like the way you phrased it, where it's not a controllable environment.

So, you know, so many things can go wrong or, you know, you don't have insight into, just to kind of like continue on that question, you know, is there a reason that you think maybe as an industry, we were a little late to kind of focus there, you know, it seems as though obvious now, right? Yeah. Most of the breakdowns and problems in continuity of care trace back to the reimbursement system. And the fact that the reimbursement system has defined the way that workflow happens, that that care is delivered, I think is truly unfortunate, but it really is the root of most of these causes.

You know, even before we talk about where patients get their care and receive their care, let's just talk about what the reimbursement industry did to dental, to eye care, to behavioral healthcare, by separating them out under different payment sources. They really took them out of essentially a whole body approach or a whole health approach to care. And then when we think about the sites of care, inpatient is separate from outpatient, separate from home care, separate from durable medical equipment, separate from long-term care, separate from even short-term rehabilitation care. And when you have different payment mechanisms, different incentives, there is a great likelihood that systems will be aligning differently to different incentives, creating different workflows, and for a patient going through the system, all this feels very disconnected and uncoordinated.

And I think that's the state of our current system. Thank you. I think that that leads to a very big opportunity to, you know, for us to really focus on that area where we can make that more coordinated and connected. You know, my second question to you is, one of the hardest challenges is, you talked about reimbursement, right?

But it is also aligning those incentives with the patient experience. What do you think moves those, you know, adding to what you talked about reimbursement, but what else do you think will move those incentives or how can we align that patient experience and maybe what your experience is that what motivates organizations to invest in that other than reimbursement? There are a lot of positive indicators that are in play right now that suggest that some of the current barriers are trying to be addressed. One of those clearly is the issue of interoperability of data and the fact that there have been data silos between inpatient systems, outpatient systems, between rehabilitation or home care and ambulatory systems and inpatient systems, I think, has created a real challenge in understanding what's actually happening to patients over an episode of time or an episode of a treatment.

And I think that with some of the moves that have happened with health policy, with government regulation, with new Office of National Coordinator Leadership, we are seeing some hopeful signs that that will be addressed. I think in conjunction with reimbursement changes and the ability to track outcomes and to give patients more ownership over their own data so that they're controlling who actually is able to see their data, I think that these are all things that are essential requirements to address some of these gaps in care and barriers of care that will lead to a more coordinated set of measures and way that we treat patients. So, I agree. So, ultimately, that cost will come down, right?

So, that's a win. I also feel like you made a good point about control. I think, and maybe you've seen this differently in generations, but it seems like patients now want more control, right? They kind of, they're doing more, whether it's more testing or they're more interested in their health and their outcomes.

And I wonder if having more control also, you know, also is something that aligns with what patients want or are looking for just based on. Yeah, I do think the ability for patients to be able to now get more information and to ask questions about their own health conditions, whether it's, you know, the more traditional way of just doing search on the internet or the newer way of establishing your own relationship with your AI tool of preference, whether it's chat GPT or anything else, is forcing patients to understand that they haven't had full control of their data, that if they want to get access to their medical records, their medications, their laboratory, they often have to go and search for it. So, I think that this ability of, if I had access to my data, if I was the one who was in control, it would give me a much greater ability to understand my own condition and to be able to get the type of healthcare that I want. And we did this in the Department of Veteran Affairs many years ago with what was called the blue button.

We gave a veteran a chance by essentially clicking on a button to have all of their data from the Department of Veteran Affairs sent to them, either back then on a USB drive, but now electronically, so that it was the veteran who actually was the one to own their data. And I think that there was good uptake, that veterans were interested in that, but really now that there's much more that one can do with their own healthcare data, I think those desires and those requests for control of your own healthcare data are growing almost every day. I had never heard of the blue button. So, you were light years ahead of even today, because I don't think there's an equivalent of a blue button.

The blue button, which was done in President Obama's first administration, so we're talking about really well over a decade ago, not only demonstrated that this was possible, but demonstrated that there was a strong need and demand from veterans themselves to have control of this information. It was really the blue button work and the way that we did this in the Department of Veteran Affairs that gave CMS, through the Office of the National Coordinator, a blueprint for doing this. And if you take a look at CMS's interoperability roles, they're built directly off of blue button. And so, it's one of the things that I don't think that people realize about the Department of Veteran Affairs.

They understand that it is an important healthcare system to care for those who have served our country, but it's also the largest integrated health system in the country. It was the first large system to adopt electronic medical health records. It led in many of the initiatives in patient safety. And this blue button one, which many people may not know about, did serve as the model for which we now are basing the rest of the country's interoperability roles.

So, it's a very important health system and one that is generally on the early stage of adopting innovation. Yeah. Thank you. I think it's, you know, now you've got my mind thinking about why it's taken us so long on the other side of all health systems, why we didn't have a version of the blue button.

Yeah. Well, look, let's go back to what I said in the beginning. The root of all evils is our current reimbursement system. The VA doesn't have that problem, right?

The VA doesn't really look to get paid by hundreds, if not thousands of different vendors. Congress gives the VA money each year through a budget process, and then they get to spend it by doing what they believe is the right thing to care for veterans. And it crosses almost all of the various sites of care from long-term care, rehabilitation, ambulatory care, psychiatric care, acute hospital care, et cetera, preventative care. And so, therefore, many of the conditions that exist in the private sector, which are real, as you know, I led many health systems in the private sector.

So, I know that these are real issues that people have to deal with. But in the Department of Veteran Affairs, reimbursement is not one of those. And therefore, it gives you the ability, frankly, to focus on what's the right thing for your patient and allows you to be able to implement some of these changes a lot quicker. Yeah.

I just have one more question on that. Is that still in use today? Of course. That's incredible.

Not USB, but yeah, it's a version of that. That's incredible. Yes, absolutely. So, I just want to move to a little bit on innovation and AI and remote monitoring, which are also kind of key areas of your expertise and focus.

And so, there's a lot of promise, particularly now with AI, but you've had to kind of separate the promise from things that really can deliver. So, how do you look at technologies and innovation and how have you looked at it in the past, really, to improve patient care or recovery? You see probably both ends, things that don't work, that don't have a use, and those things that really are very useful. Yeah.

I do think that AI is probably in a different category than any other type of tech that we've seen. You're right. There's always been new technology being introduced, new innovations, the promise of a complete change in the approach to care. And I think back to one of those that I'm not sure really materialized in the way that we thought it would, but we thought once with the uncovery of the genetic code of once DNA was actually decoded that we would enter this new era of personalized medicine and genetic testing that would change everything.

And while we're still watching that story play out, I don't think it's changed everything. In fact, it's been much slower than many people had anticipated. But as I said, I do think AI is a different type of technology. I do think that it will, in a much quicker timeframe and much more significant, transform the way that we do healthcare from drug discovery, all the way through treatment patterns to behaviors of both patients and providers.

And so I think we have to think about the adoption of it very differently. Now, having said that, whenever new technology comes into healthcare, it is met with a great deal of resistance and a great deal of conservatism. Some of it justified, as I said. But in this case, I think we're seeing AI on the provider side being adopted right now, largely in the administrative functions, in the revenue cycle functions, in the dictation functions, in the coding and information retrieval functions.

We're seeing, although the FDA has been fairly responsive in approving certain types of clinical AI tools, and they continue to be active in that area, we're seeing much more cautious adoption of those tools in clinical environments. I do think that we'll continue to see what I would call the administrative aspects of artificial intelligence continue to be adopted quicker than clinical. But over time, I do think that we will begin to see significant inroads in the use of clinical artificial intelligence as well. Yeah, thank you.

I agree. And I think there's so many applications on the admin side, even from supply chains. Also, you mentioned web cycle and dictation and information retrieval. I think there's many applications.

It's getting, you know, people, the right tools and, you know, to learn how to use those, but there's a lot of application and probably those first good use cases and analytics, of course, as well. So I want to move to CMS teams a little bit and just kind of have a conversation with you about that, because that's really changed a lot of how hospitals have to think across multiple surgical episodes, right? It used to be CJR and BPI, but now we've come across some five, probably more complex areas like CABG procedures for one. What's your sense about how these, give or take, eight-hour hospitals are doing?

You know, now it's been a month. You know, what's your sense of probably how people are feeling or prepared for, you know, doing in terms of the CMS team? And the concept of engaging clinicians and hospital systems in episodes of care, particularly around surgical procedures, is actually not new. But what is the thing to watch about the teams model, which is, of course, CMS program, the only real thing that impresses me about teams is that it's a mandatory model.

You know, 780 hospitals got a letter saying, you will be participating starting January 1st of 2026. And that is something that we really haven't seen before. We've seen a lot of voluntary participation in episodes or bundled care so that you get people who are motivated or understand the opportunity, want to participate. But in this mandatory model, every hospital that got a letter is in this program, whether they like it or not.

And that is going to be different because it's going to force administrators and clinicians that have not wanted to think about this or have kept their head in the sand under value-based models to now be in significant risk if they don't perform. Because these couple of procedures that you mentioned can account for 15 to 20 percent of a hospital's total revenue. So, that is significant and it's going to cause them to think about things differently. Now, in my view, most hospitals are totally unprepared to manage this way.

It requires a different type of way of looking at data. It requires a different approach towards organizing your clinical care plans. It requires different types of conversations with providers that you normally don't interact with, particularly when patients leave the hospital. So, it's going to force a whole set of different ways of thinking about things and behaviors that I don't think that most hospitals have had the time or effort put into to prepare for.

And once they start seeing this hitting their bank accounts differently, they're going to be paid differently and be held accountable financially differently. I think it's going to get some attention that just hadn't really been given to it. So, it's going to be a very important and interesting model to follow nationally. And I think it, particularly if it's expanded to either more conditions or more hospitals, will begin to start having a larger impact on the way that we think about the management of surgical patients.

Yeah, I love how you mentioned, you know, the thing that you love that it's mandatory. And it's true, right? Episodes, you know, probably have been around a while, but this was different in that it's forcing everyone to, it moves the needle completely. Like they have to be able to get it right, right?

To do, to manage the whole 30 days post-op as well. It's a great point. Thank you. I think on, you know, just advancing that a little further with my next question, because behavior or patient engagement are really the collaboration between the hospital, physician, clinicians, and the patients are so important.

There's a lot of things that patients do that really require, you know, them to be part of the process. Is there things that, you know, hospitals can think about on the behavior side or really what changes can be made or, you know, how to improve the recovery? Because their engagement is key. Yeah, the more that we see models that hold one party, whether it's a hospital or any other party accountable for the outcomes, we're going to need to see different strategies employed.

One of those is clearly a strategy of patient engagement and the issue of making sure that the patients and their caregivers and their families all understand the objectives and understand how the medical processes work, I think is vitally important and we've paid very little attention to this. So, getting engagement is important. Understanding how to impact patient behavior is also important and that can either be done through behavioral economics or it can be done through other behavioral strategies that engage people in an understanding of what motivates them and some of that is personal, some of it is cultural. So, it needs to be different for the communities or the patients that you're serving.

I also think that the ability to have longitudinal data, whether that's through remote monitoring strategies or wearables or implantables, being able to understand what's happening both inside and outside of the hospital's walls is going to be important and then having a point of accountability, whether that is technology-driven or clinician-driven to be able to make sure that somebody's paying attention to know when that to intervene or when it's necessary to intervene, you know, century and it should lead to improved outcomes and hopefully to lower costs as well. You said a couple of things that I love and, you know, whether it's behavioral economics, behavioral strategy, but it ultimately is personalized. So, personalized either by themselves or their culture, which I never thought of and I guess that also maybe borders a little bit on, you know, social determinants of health, maybe a little bit or just how we interact with patients, but I think that's a really big concept that we have to start talking to hospitals about the individual way that we involve patients that may have to get down to that level of being precise, which I never thought about because obviously what might motivate you would be different for me, right? Generally speaking.

Right. So, I love that perspective. Thank you. So, we're really going to, you know, wrap up.

I don't, Secretary Shulkin, this was a great conversation through, you know, really speaking about, you know, episodes of care and the surgical journey. There's a lot to this and we'd love to have you on the show again, but, you know, I appreciate your discussion and your thoughts and really a lot of the strategies that I think, you know, we're going to need to deploy. So, thank you for your time today. It was great.

Thank you. Thank you, sir. Appreciate it. Absolutely.

Anytime. Thanks for listening to The Surgical Journey. Join us next time as we continue examining smarter, more connected approaches to perioperative care.