Efforts by local hospitals to cut costs, particularly among Medicare patients, are attracting attention nationally.
AtlantiCare Regional Medical Center participated in a pilot program in 2009 to pay bonuses to doctors who found ways to cut the cost of treating Medicare patients. Called “gainsharing,” the program was sponsored by the New Jersey Hospital Association and is expanding now from 12 to 30 New Jersey hospitals, including South Jersey Healthcare in Vineland.
Shore Medical Center in Somers Point is giving its doctors greater flexibility over its operations, particularly over how patients receive a continuum of care.
And Cape Regional Medical Center in Middle Township is focusing on providing continuous care to its patients instead of the episodic care some patients with chronic conditions would seek when they would go to the emergency room.
The idea for the expanding pilot program was to get doctors to consider simple efficiencies that could lead to big savings over time, said Kerry McKean Kelly, spokeswoman for the association.
“One thing a hospital might do with a physician is ask them to move their patient rounds to the morning instead of the afternoon,” she said. “By doing that, the physician can still see their patients and determine if it’s safe to send them home. There’s no detriment to the patient, but the hospital has cleared that hospital bed earlier in the day.
“That is an example of some minor change of the day-to-day operations. But if you multiply that over 365 days, it can lead to substantial savings,” she said.
The Office of Inspector General for the U.S. Department of Health and Human Services in 1999 rejected the idea of giving doctors financial incentive to cut costs in patient treatments, saying it violated federal law. But in 2005, after receiving assurances that safeguards in place would ensure the care of patients, the agency said it would not sanction hospitals that pursued gainsharing arrangements.
One requirement stipulated that patients be told if their doctor is in a gainsharing program.
Medicare covered more than 50 million people last year and cost taxpayers about $555 billion, according to the Congressional Budget Office. Enrollment. Costs are expected to balloon as more baby boomers age.
The health care industry is the biggest private employer in the state, second only to government in total jobs, according to the New Jersey Hospital Association’s 2012 annual report. Hospitals generate $20 billion per year in New Jersey and employ more than 140,000 full-time and part-time workers.
Shore Medical Center relies on 13 “physician leaders” to help the hospital’s senior team make clinical and business decisions, CEO Ronald W. Johnson said. That cuts costs by eliminating redundancies and better coordinating patient care from the primary-care doctor to the specialists.
“The physician leaders are absolutely a critical key to all of us for changing health care and making it more efficient,” he said.
To cut costs, Cape Regional Medical Center is coordinating physicians, home-health agencies, long-term care facilities and others in providing continuous care. That keeps patients healthier so they do not have to return for emergency treatment, spokesman Tom Piratzky said.
“Working together with our partners at the time of discharge, we coordinate the patient’s care with the appropriate post-acute providers,” Piratzky wrote in an email.
The health care industry and government regulators are taking several steps to save money. Federal law enforcement is cracking down on Medicare fraud, recovering $4.2 billion last year.
Hospitals in Delaware and California are embracing the New Jersey pilot program. About 70 primary-care doctors and specialists affiliated with AtlantiCare participated, said Dr. Marilouise Venditti, of Medford, Burlington County, chief medical officer at AtlantiCare Regional Medical Center and president of AtlantiCare Physician Group.
Doctors received bonuses from their hospital as high as $100,000, depending on the number of patients and their efforts at improving efficiency. At AtlantiCare, the bonuses averaged about $4,500 per doctor, Venditti said.
“This is not simply considering costs as well as treatment,” she wrote in an email. “The more important point is that physicians play a key role in delivering appropriate, quality care timely and efficiently.”
To ensure that patient care is not sacrificed by cost-cutting, participating hospitals must meet strict standards for care, the association’s Kelly said.
“The thing we want to do is respect the clinical knowledge of physicians. That remains paramount,” she said. “There is nothing forcing a physician’s hand if he has concerns about the quality of patient care.”
Kelly said Medicare’s reimbursement model put doctors and hospitals at odds over how they got paid. Hospitals were paid every time a patient was admitted, regardless of the length of stay. But doctors were paid based on the number of procedures they performed and the number of days their patients were hospitalized, she said.
“They were working from different playbooks,” she said. “If your goal is to reduce Medicare costs for the long term to make it sustainable for the future, these two incentive programs do not make sense.”
The pilot program showed encouraging results by saving about 10 percent over previous years, she said. Likewise, the program was able to reduce the length of patient stays in the hospital.
“That’s better for the patient, because the longer you spend in the hospital, the longer you could be subject to infection or illness that occurs in a hospital setting,” Kelly said.
AtlantiCare recently abandoned the pilot program and moved to a different model of efficiency, forming an accountable-care organization. The goals are the same: providing the best, most efficient care.
“AtlantiCare realized some of the intended benefits of this pilot program. However, it is difficult to quantify the actual savings attributed to gainsharing because, like many hospitals, AtlantiCare has multiple initiatives aimed at enhancing the quality and efficiency of care,” Venditti said.
But she saw other benefits from participating.
“It fostered a greater understanding about the role of physicians and the importance of communication and collaboration among all care providers in providing quality care,” she said.
The New Jersey Hospital Association’s pilot program is just one of several efforts aimed at curbing costs and eliminating redundancies.
“Whether you’re in this program or trying to develop an accountable-care organization or do something else under health care reform, the reality is Medicare (reimbursement) payments are declining. In order for providers to continue to provide care and take care of Medicare patients, they need to find a way to be more efficient,” Kelly said.
Shore Medical Center’s Johnson said the hospital also incorporated its pediatric intensive care unit into its emergency room, which has freed up staff and beds at the hospital.
“Pediatric units were closing all over the state. We looked across the country and found something called a hybrid unit,” he said. “Those are innovative ways of controlling costs while providing a very high-quality product to the community we serve.”
Cape Regional Medical Center calls the patient or patient’s caretaker within 48 hours to make sure he or she understands their post-hospital care and will take the prescribed steps to get better, Piratzky said.
And the hospital’s home-care agency, Cape Visiting Nurse Association, uses technology to provide remote monitoring of a patient so they can better manage the patient’s care at home, which leads to fewer hospital stays, he said.
“We are focused on providing the highest quality of care while eliminating unnecessary services,” he said.
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