lessons learned from implementation of gainsharing
Gainsharing programs administered by two hospital associations illustrate how best to implement such a program to control costs through the payment of incentives to physicians.
In an era of accelerating healthcare reform, population health management represents a new mode of operation for the industry. Some organizations are transitioning to the new business model by investing in legal and organizational infrastructure-adding new components, contracting to supply new services, and reorganizing internal responsibilities. However, in addition to enacting structural change, hospitals should be transforming their cultures to succeed in a payment system that is based on value, not volume.
Shared-savings programs (e.g., accountable care organizations [ACOs]) typically reduce payments with the aim of encouraging providers to care for patients in the lowest-cost appropriate setting and to eliminate services that are not medically necessary. Payers then give the providers a share of the savings that are realized.
How can hospitals encourage physicians-the people actually responsible for resource decisions in patient care-to deliver care with the quality and efficiency required by the new healthcare paradigm? A gainsharing program enables hospitals to control costs through the direct payment of incentives to physicians based on cost and quality performance (see the sidebar on page 79).
Beginning in 2006, large-scale gainsharing (i.e., encompassing all costs associated with all inpatient cases) was successfully deployed in hospitals caring for
Gainsharing can transform an organization's cultural foundation by directly aligning hospital and physician incentives. Although financial incentives are the most visible and measurable element, they are only part of the equation. A shared strategic vision, implemented through change-management processes, is essential to sustain new and altered clinical and administrative activities.
Driving Success in Gainsharing
The details of a large-scale gainsharing program are beyond the scope of this article. Instead, we focus on the factors that are most important to success. We used the venerable eight-stage process of creating major change introduced by
Establish a sense of urgency. Beyond the pervasive message that hospitals need to cost less, urgency to innovate in health care comes from specific signals being sent by the government, payers, regulators, and patients. However, we suggest adding a corollary about persistence to Kotter's first point about urgency.
For example, some industry observers saw the need to include a physician component in
In 1999, NJHA began talks with the
Create a guiding coalition. Implementing innovative processes and programs may raise anxiety about the risks inherent in making significant changes. Overcoming this hesitancy requires that a few individuals initially adopt the innovation and then spread the word. Kotter notes the importance of establishing a group with enough authority and credibility to guide efforts.
In the
Develop a strategic vision. The underlying problem of escalating healthcare costs cannot be resolved without first aligning provider interests under a common strategic vision. Such alignment requires effective collaboration between physicians and hospitals.
Although financial incentives are at the core of gainsharing, the idea is not for hospital executives to give physicians money to do what the executives want. Such an approach would not produce sustainable change. Instead, the NJHA-led gainsharing demonstration was seen as a framework to align the overall vision of hospitals and physicians using standardized data, best practices as determined by the hospital and medical staff, and focused internal discussion. It was important to harness the financial incentives-as defined and administered uniformly through a collaborative process involving hospitals, medical staff, and the government-to meet the unique priorities of each institution.
When proposing the program, NJHA spelled out a vision: "To enhance the quality of patient care through commitments to care redesign and quality initiatives; and to reduce the cost of care by eliminating medically unnecessaiy services." The association organized and invested in a process designed to meet the concerns of regulators, hospitals, and physicians. The resulting program was designed to be objective, credible, auditable, replicable, minimally disruptive, flexible, and attractive to physicians.
NJHA consistently reinforced this vision and strategy through the initial demonstration and subsequently during its participation in Model 1 of the BPCI initiative.
Communicate the vision for change. Gainsharing works best when internal champions communicate the vision and benefits. For this reason, it should be implemented from the inside out by a hospital steering committee charged with identifying, prioritizing, and coordinating hospital-specific gainsharing initiatives to engage medical staff and provide "hands-on" governance. The committee should be composed of administrative leaders, a public representative who has no formal affiliation with the hospital, and physicians, who should constitute at least 50 percent of the membership. The committee should provide a venue for physicians who will champion the initiative, creating a feedback loop that allows for continuous fine-tuning based on practical experience. For example, physicians on the committee can share with other committee members any ideas and concerns that have been raised by their peers.
Each hospital steering committee in the
Empower physicians to take broad-based action. Although the primary goal of gainsharing is to bend the cost curve, it also should empower physicians to drive change.e Physicians will be motivated by the financial incentives, but gainsharing should appeal to their pride in their clinical accomplishments. Physicians in a gainsharing program should be encouraged to initiate positive change in care processes using a reference point of best-practice norms developed from statewide or regional severity-adjusted data. These best practices reflect the performance of physicians treating the same kinds of cases at lower costs with equal or better outcomes.
In the
versus expected length of stay, actual versus best-practice costs, and the incentive available and attained for each case. The reports revealed areas of operation that required effective hospital-physician collaboration, which was coordinated through the steering committee. Other changes required only that physicians use their day-to-day experience and creativity to develop solutions that could improve the cost efficiency of their practices.
Generate short-term wins. Large-scale gainsharing should use practical implementation approaches that enable hospitals to endow incentive payments to physicians within nine months, and every six months thereafter. The author
Contrast gainsharing with ACOs and bundled payment programs, in which savings may not flow to participating providers until 18 months to two years after implementation and payment methodologies may be complex and uncertain. Gainsharing is more likely than those programs to help leadership create short-term wins, build "keystone habits," and leverage momentum to support longer-term strategies. Moreover, the wins are unambiguous, with incentives based on a well-defined, objective, pre-established methodology that is visible to all medical staff. The incentives tie directly to achieved levels of performance, as well as cost and quality improvement.
The experience of NJHA suggests that maintaining momentum, keeping physicians engaged, and building success can convert internal critics of the program. Facilities typically have found that physician participation in gainsharing reaches 70 to 80 percent of covered admissions. The exhibit at left shows how hospitals participating in the
Consolidate gains and produce more change. Although gainsharing focuses on inpatient care, its success can be used as a foundation for hospital strategies that involve more risk-such as participation in ACOs, patient-centered medical homes, or bundled payments. Those initiatives require complex analytics, new legal structures, and a strong level of commitment by medical staff. The experience from a well-implemented, productive gainsharing program can help build credibility, trust, and confidence.
Anchor new approaches in the culture. Although hospital strategy increasingly is focused on outpatient care and population health, inpatient acute care continues to shape the hospital culture and forms the foundation of more profound changes.
At
* Resolved problems related to the large-scale implementation, operation, and administration of gainsharing
* Achieved improvements in efficiency
* Promoted patient safety and quality of care
* Provided support for care redesign
Building on those results, NYU Langone formed a clinically integrated network (CIN) to expand on its strong relationships with physicians and capitalize on the redesigned care management infrastructure to reduce costs, improve quality, and provide a better experience for patients throughout the system. The CIN, in turn, became the bedrock of a collaborative accountable care initiative launched with
Culturally, physician alignment in inpatient care provided the core for building more sophisticated structures. The gainsharing program was seen to encourage greater alignment between NYU Langone and the medical staff, and placed organizational focus on achieving high-quality outcomes in the most cost-effective way.
Core Improvements
Gainsharing fosters a culture of improvement that capitalizes on the creativity, knowledge, and problem-solving ability of the physician to implement change and create added value in an era of healthcare reform. The structure of the program also provides for institutional collaboration that amplifies both the process and the results. Kotter's change-management steps provide a useful framework for ensuring that gainsharing continues to encourage improvement and sustain high-quality performance.
AT A GLANCE
* Gainsharing offers a hospital a way to control costs by using incentive payments to engage physicians in efforts to improve cost and quality performance.
* Author
* Successful gainsharing fosters a culture of improvement that capitalizes on the creativity, knowledge, and problem-solving ability of physicians to implement change and create added value.
View a sample of a dashboard designed to track physician performance in a gainsharing program at hfma.org/gainsharingtracking.
Holding Down Costs
Gainsharing focuses not on revenue streams, but on care redesign and cost reduction. Examples of short-term cost reduction opportunities driven by gainsharing include reduced length of stay, more efficient supply chain management, and improved adherence to pharmacy protocols. Long-term initiatives focus on patient management. For example, optimizing active bed management in the intensive care unit-i.e., transitioning patients to step-down units or med/surg floors when appropriate-not only lowers marginal costs but also increases the availability of clinical resources to facilitate throughput from the emergency department.
a.
b. Leitman, I.M, et at, "Quality and Financial Outcomes from Gainsharing for Inpatient Admissions: a Three-Year Experience,"
c. Quin, K., "After the Revolution: DRGs at Age 30," Annals of Internal Medicine,
d. "How a N.J. 'Gainsharing' Program Pioneered Bundled Pay," The Daily Briefing,
e. Amabile, T.M., "
f. Duhigg, C., The Power of Habit: Why We Do What We Do in Life and Business.
g. Seligman, D., and Chorney, G.S., "Aligning Physician and Hospital Goals Through Gainsharing," AAOS Now,
h. Punke, H., "25 Recently Announced ACOs," Becker's Hospital Review,
About the authors
is senior vice president, Federal Relations and Health Economics,
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is vice president,
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