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Hospitals saved $113M in gainsharing pilot; second program underway

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Twelve New Jersey hospitals achieved $113 million in health care savings during a three-year pilot project that encouraged hospitals and physicians to work together to provide more efficient, high-quality care, according to the New Jersey Hospital Association, which led the New Jersey Care Integration Consortium, also known as the “gainsharing” program.

The Medicare pilot program gave physicians financial incentives based on their performance on quality and efficiency metrics.

The program reduced costs per admission by roughly 8.5 percent. Of the total savings of nearly $113 million, about 17 percent (nearly $19 million) was paid out as physician incentive payments.

“In an environment where there are significant pressures downward on government revenue, and Medicare is a big part of any hospital’s business, this was an opportunity for the hospitals to coordinate care delivery with the doctors and for those doctors that performed and improved the quality of care to receive a modest financial bonus to do so,” said Sean Hopkins, NJHA’s senior vice president of health economics.

He said that, when the program ended in 2012, the Centers for Medicare and Medicaid Services launched a new program that built on the success of the New Jersey gainsharing pilot: “To a great extent, New Jersey hospitals have really been on the forefront of care coordination, improving the dialogue with all the providers.”

The new program, the CMS Bundled Payments for Care Improvement Initiative Model 1 Gainsharing Program, enrolled a new group of 16 New Jersey hospitals and is still ongoing, Hopkins said. Under that program, now in its second year, the hospitals are required to accept a reduction in the Medicare reimbursement in order to participate in gainsharing. The Medicare reduction was 0.25 percent in the first year and rose to 1 percent this year.

“Traditional Medicare protocols pay hospitals and physicians in different ways,” Hopkins said. “Hospitals receive a set rate for each patient case, regardless of how long a patient is hospitalized, while physicians are paid ‘a la carte’ for each test, procedure or patient day in the hospital. The gainsharing philosophy makes hospitals and physicians partners in identifying more efficient ways to deliver quality health care.”

The gainsharing pilot was featured by the U.S. Agency for Healthcare Research and Quality as an example of new models that are reforming the nation’s healthcare delivery system, according to NJHA. 

“Healthcare is changing – no question – and New Jersey hospitals are committed to being leaders in that change,” said NJHA President and CEO Betsy Ryan.

The 12 original pilot hospitals were:

  • AtlantiCare Regional Medical Center, Atlantic City
  • CentraState Medical Center, Freehold
  • Holy Name Medical Center, Teaneck
  • Hunterdon Medical Center, Flemington
  • Jersey Shore University Medical Center, Neptune
  • JFK Medical Center, Edison
  • Monmouth Medical Center, Long Branch
  • Our Lady of Lourdes Medical Center, Camden
  • Overlook Medical Center, Summit
  • St. Francis Medical Center, Trenton
  • Robert Wood Johnson University Hospital Somerset, Somerville (formerly Somerset Medical Center)
  • The Valley Hospital, Ridgewood

Hopkins said the original gainsharing program “was limited by CMS to 12 hospitals and 12 hospitals only. Many other New Jersey hospitals requested the opportunity to get in on the original demonstration. The Model 1 program provided many of these hospitals with their first opportunity to initiate the gainsharing program.”

The 16 hospitals in the new program are:

  • Capital Health Medical Center – Hopewell
  • Capital Health Regional Medical Center
  • Robert Wood Johnson University Hospital
  • Robert Wood Johnson University Hospital Hamilton
  • Robert Wood Johnson University Hospital Rahway
  • Saint Clare’s Hospital (Denville)
  • Saint Clare’s Hospital (Dover)
  • Saint Michael’s Medical Center
  • Saint Peter’s University Hospital
  • Inspira Medical Center Elmer
  • Inspira Medical Center Vineland
  • Inspira Medical Center Woodbury
  • St. Joseph’s Regional Medical Center
  • St. Joseph’s Wayne Hospital
  • St. Mary’s Hospital Passaic
  • University Medical Center of Princeton at Plainsboro

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Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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