July 24, 2014: Federal ‘Innovations Exchange’ Features N.J. Hospital Pilot Program
NJHA’s ‘Gainsharing’ Pilot Achieves $113 Million in Healthcare Savings
PRINCETON – A consortium of 12 New Jersey hospitals achieved $113 million in healthcare savings under a pilot project that encourages hospitals and physicians to work together to provide more efficient, high-quality care, according to a profile from the U.S. Agency for Healthcare Research and Quality. (available at http://www.innovations.ahrq.gov/content.aspx?id=4138).
The project, officially called the New Jersey Care Integration Consortium but informally known as “gainsharing,” was led by the New Jersey Hospital Association with support from Applied Medical Software Inc. It was first launched in 2009 and became a three-year pilot project. Based on its success, NJHA secured federal approval for a second, larger demonstration program (known as "Model 1") under the Affordable Care Act’s Bundled Payments for Care Improvement initiative. That project is ongoing.
The voluntary pilot program offered individual physicians financial incentives based on performance on quality and efficiency metrics, including performance versus peers and improvement over time. Physicians received regular feedback on their performance, including an easy-to-read dashboard and more detailed patient-specific information. Various requirements and measurement systems were put in place to ensure that quality of care remained a priority.
And the results? The program reduced costs per admission by roughly 8.5 percent, with these reductions generally increasing over time. Total savings for the 12 participating hospitals reached nearly $113 million, of which roughly 17 percent (just under $19 million) was paid out as physician incentive payments. Performance on various quality measures either remained the same or improved throughout the program.
“Traditional Medicare protocols pay hospitals and physicians in different ways,” said Sean Hopkins, NJHA’s senior vice president of health economics. “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 healthcare.”
The project was featured in AHRQ’s Innovations Exchange as an example of new models that are reforming the nation’s healthcare delivery system to sustain it for the future.
“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 are:
- 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