What the domestic centres-of-excellence programmes actually do
American employers have sent employees to designated hospitals under bundled contracts for years, and the evaluations report real price effects alongside uptake in the teens and twenties and a selection question none of them examines.
Published November 13, 2026
8 min read
Information provided is for general reference only and does not constitute medical advice. Consult a qualified healthcare professional before making medical decisions.
Centres of excellence programmes let an employer contract a defined price for a defined surgical bundle and steer employees to it. One evaluation found a $4,229 reduction in episode prices, yet after implementation only 16 percent of joint replacements went through the programme, and about 30 percent of referred patients were advised against surgery.
Sylk Health. Current as of October 2026.
The design closest to a cross-border arrangement already exists domestically. An employer contracts directly with a chosen hospital for a defined procedure at a defined price, and steers employees toward it. It has been running long enough to be evaluated in the peer-reviewed literature, which makes it the best available evidence about what happens when a purchaser uses a price from outside its usual network. This post reports what the evaluations found and what they do not examine.
What does a centres-of-excellence arrangement consist of?
It consists of a direct contract for a bundle, with complications inside the price. One evaluated programme (opens in new tab) is described by its authors as "a direct payments program developed by Carrum Health that was implemented among self-insured employers between 2016 and 2020". The contracts "cover a range of procedures, of which total knee and hip replacement, spinal fusion, and bariatric weight loss procedures are the most common."
The scope of the bundle is the part a buyer should read twice, because it is the thing most cross-border packages do not do. The contracts "hold the provider responsible for the surgical procedure, all preoperative care in the three days before the surgery, and any care to treat related complications, including readmissions, within a minimum of thirty days after the procedure." The bundle therefore has three parts:
the operation itself;
pre-operative care in the three days before surgery;
care for related complications, including readmissions, for at least 30 days afterwards.
That is the same boundary question our own price definition turns on, answered by contract rather than by custom.
The findings at a glance
The table below collects the measured results from the two evaluations quoted in this post.
Measure
Finding
Study
Episode price, three procedures
$4,229 lower
Direct-payment programme, Health Affairs, 2021
Referred patients recommended conservative treatment
Down 29.2% in the first year, relative to PPO members
Public-employer comparison, 2017
Payment per case in that design
Not reduced
Public-employer comparison, 2017
The last two rows describe one design that saved money with fewer cases at an unchanged price per case.
What did the programmes do to price?
They lowered price, by more than one route. The direct-payment evaluation reports a per-episode figure: implementation "was associated with a $4,229 reduction in episode prices for the three procedures."
A second study, of a public employer's programme (opens in new tab), found something more complicated and more useful. Both designs it examined "prompted higher use of designated low-price high-quality facilities and reduced average replacement expenses per member at the plan and system levels." One of the two did it a different way: the centres-of-excellence design "lowered HMO members' utilization rates by 29.2 percent in the first year, compared to PPOs, but did not reduce HMO average replacement payments per case."
One design saved money by lowering the price per case. The other saved money by there being fewer cases, at an unchanged price per case. A buyer told only that a centres-of-excellence programme saved money has been told almost nothing.
The screening effect, which is rarely mentioned
The direct-payment evaluation reports a finding that sits oddly with how these programmes are sold: "Approximately 30 percent of referred patients were recommended for conservative treatment instead of surgery (for example, physical therapy), and most of those patients followed the recommendation and pursued nonsurgical care."
Nearly a third of people referred for an operation did not have one. Whatever else such a programme is, it is a second opinion at scale, and some of its effect is that fewer operations happen rather than that operations cost less.
How many people actually use them?
Fewer than the price figures imply, and the literature is thin here. The direct-payment study reports uptake for procedures rather than for people: "After implementation, 23 percent of spinal fusion, 16 percent of joint replacement, and 30 percent of bariatric procedures were administered through the program." At best, roughly one joint replacement in six among employees of participating employers went through the programme. Two readers looked for a figure expressing uptake as a share of eligible employees and neither found one published.
That matters for anyone reasoning from these programmes to a cross-border one. A design that reaches a sixth of eligible procedures in its own country, with no border and no unfamiliar system, sets a realistic ceiling on what steering achieves.
The question the evaluations do not ask
Each of these programmes is voluntary, so the people who use one are not a random sample of those eligible. The 2021 evaluation discusses selection at the level of employers, which chose to join the programme, and both studies adjust for patient characteristics such as age, sex and case mix. Neither directly compares the employees who used a designated hospital with eligible employees who did not. For an argument about a voluntary programme that is the more relevant selection question, and on the evidence we could open, nobody has answered it.
Frequently asked questions
Do employees pay anything at a designated hospital?
In the evaluated direct-payment programme they paid nothing. Its authors report that "Patients who receive care from participating providers have no cost sharing (for example, copayments, coinsurance, or deductibles)," and that "patients are protected against balance bills for out-of-network service." Employees who chose other covered providers "are charged standard cost sharing," which is the incentive the design relies on over its 2016 to 2020 study period.
Do current programmes pay for travel?
Some do. Walmart's current benefits page (opens in new tab), retrieved in October 2026, states that hip and knee replacements through its programme "are covered at 100% before deductible with most plans," and adds: "Your plan even covers travel and lodging for you and a caregiver." It names the same administrator as the 2021 evaluation for those procedures.
Do the evaluations show which patients choose these programmes?
Not directly. The 2021 evaluation discusses employers selecting into the programme, and both the 2021 and the 2017 studies adjust for patient characteristics such as age, sex and case mix. Neither compares the employees who used a designated hospital with eligible employees who did not. Until that is studied, part of the measured effect could reflect who chose the programme rather than what it did.
What transfers from centres of excellence, and what does not
What transfers from centres of excellence is the mechanism. A purchaser that contracts a defined price for a defined bundle, with complications inside it, and steers people toward it, sees prices move. What does not transfer is the environment: one regulatory system, familiar recourse, no border and an administrator that already knows how to pay the claim. Those are live questions in a cross-border arrangement, and our post on how a foreign claim gets paid takes up one of them.
We supply a price and nothing else. We do not arrange care, we do not steer anyone anywhere, and we have no view on whether an employer should run a programme of this kind. The literature offers a realistic expectation: a real effect on price, a smaller one than the headline implies once uptake is counted, part of it coming from fewer operations, and a selection question still open.
This article is general information about published research. It is not medical, legal, tax or financial advice; consult counsel on any plan decision.
Disclosure: Sylk Health supplies procedure-price data and earns a commission from providers on bookings completed through its platform. It would benefit from broader use of externally benchmarked prices for medical procedures, and from any gap between those prices and prices in the United States.
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