SOURCE: VHA

May 15, 2008 10:41 ET

Health Affairs Publishes Research Paper Demonstrating Benefits of Gainsharing

IRVING, TX--(Marketwire - May 15, 2008) - The May-June issue of Health Affairs magazine has published a research paper that clearly concludes that gainsharing has a positive financial and clinical impact on the health care organizations that pursue it. The research paper examines the results of the Office of Inspector General (OIG) approved gainsharing arrangement designed and facilitated by Goodroe Healthcare Solutions, a VHA company. These projects reduced in-lab costs for coronary stent patients by 7.4 percent while simultaneously providing excellent patient care. Ninety-four percent of those savings came from reduced costs on devices and drugs used for these procedures.

Goodroe is the only organization that has earned approval from the OIG for its gainsharing models. In all, Goodroe has received approval on 10 gainsharing models designed to achieve economic alignment between hospitals and their physicians. Their first approval was in 2001.

The authors estimated that widespread implementation of gainsharing for the nation's 620,000 coronary stent patients during 2005 could have yielded savings of approximately $195 million. The paper examined data collected by Goodroe's CathSource system on 220,520 coronary stent patients from the fourth quarter of 2001 through the fourth quarter of 2006.

The peer-reviewed study, "Hospital Physician Gainsharing in Cardiology," was written by Jonathan D. Ketcham and Michael F. Furukawa, assistant professors in the School of Health Management and Policy at Arizona State University's W.P. Carey School of Business in Tempe.

"We are thrilled at the outcome of their research, and we're honored to have contributed to their positive conclusions," said Joane Goodroe, founder of Goodroe Healthcare Solutions and a VHA senior vice president. "These important results validate our long-held assertion that approved gainsharing arrangements that align the patient's best interests with cost-effective, quality care indicates that physicians and hospitals can work collaboratively to reduce healthcare costs while maintaining quality patient care."

Gainsharing arrangements reward physicians for helping the hospital implement cost-reduction strategies that maintain or improve patient care quality. Typically, physicians independently choose the medical devices they use during cardiac and other surgical procedures, such as pace maker implants or implantable internal defibrillators.

Under a gainsharing arrangement, physicians and hospitals jointly review and evaluate patient outcomes, review cost variations for similar devices and determine whether a lower-priced device delivers the same or better patient outcomes. Physicians may then voluntarily elect to use lower-cost devices as long as the quality of care is not negatively affected. Savings at the end of a program year are then shared between the hospitals and participating physicians.

KEY FINDINGS:

--  Gainsharing reduced in-lab per-person costs in coronary stent patients
    by $315
--  Gainsharing had a positive affect on quality care
--  Gainsharing did not result in physicians steering their sickest
    patients to other hospitals
--  Gainsharing could encourage physicians to collaborate and adopt best
    practices
    

"We found no evidence that gainsharing prompted physicians to avoid patients with existing health problems or pick the healthiest patients," said Ketcham. The study's authors write -- "Gainsharing reduces costs for coronary stent patients while apparently leaving quality and access unharmed." Ketcham adds that analyzing gainsharing's effects on additional quality measures and understanding how gainsharing influences physicians' decisions would be valuable. The authors also note that widespread adoption of gainsharing could alter how device makers decide which types of products to develop and market.

About VHA Inc. -- VHA Inc. is a national alliance of leading not-for-profit health care organizations that work together to improve the health of the communities they serve. VHA delivers industry-leading supply chain management services and enables regional and national member networks to improve clinical and operational performance, and drive sustainable results. Based in Irving, Texas, VHA has 16 local offices serving more than 1,400 hospitals and 21,000 non-acute health care organizations across the United States.

About Goodroe Healthcare Solutions, LLC -- Goodroe Healthcare Solutions, a VHA Inc. company (www.goodroe.com), is an Atlanta-based firm that concentrates on helping hospitals reduce costs and improve quality in specialty surgical areas. Goodroe's clinical consultants work with hospitals to analyze their care processes and find ways to make hospitals more efficient while improving effectiveness. Goodroe focuses on cardiology, orthopedic medicine and neurosurgical procedures, such as insertion of spinal implants. These important specialty services generate 60 to 80 percent of supply costs for many large hospitals, as well as considerable revenues, so controlling costs associated with these procedures can help hospitals improve their financial health and assure that resources are available to fund other patient care activities. Goodroe has helped more than 300 hospitals nationwide implement quality improvement and cost savings initiatives.

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