Hospital-Physician Gainsharing (Text Version)
On September 27, 2010, Jonathon Ketcham made this presentation at the 2010 Annual Conference. Select to access the PowerPoint® presentation (185 KB).
Jonathan Ketcham, Ph.D.
Arizona State University
September 28, 2010
Background and Relevance
- Costs are high, value uncertain, and incentives are misaligned due to fragmentation.
- Reforming payment to improve value: from individual to group incentives?
- Unknown whether, when and why group incentives work.
- Challenge for policymakers and managers.
- Exploration by both CMS (demonstration programs) and the private sector (gainsharing).
Background and relevance
- Gainsharing: a group-based incentive, where a physician receives payment if the group overall reduces its costs in predetermined areas relative to its historical baseline.
- Preliminary work:
- Reduced cost per patient.
- No negative effects on access, quality.
- Subset of patients and time.
- Need to understand the mechanisms
Project aims: To determine...
- If gainsharing lowered costs through utilization, prices, or both, and how any price reductions were achieved.
- If gainsharing promoted coordination and standardization of physicians' treatment decisions.
- How physicians varied in their responses to gainsharing.
- Develop a theoretical model.
- Empirically analyze data.
- Develop and estimate a structural model.
Context and Specific Approach
- Proprietary data from coronary catheterization labs
- Analyze all percutaneous coronary intervention (PCI) patients.
- 25 programs at 13 hospitals, plus ~ 140 non-gainsharing hospitals, 2001-2009.
- Before and during the programs → a difference-in-difference strategy.
- Exploring changes in changes (Imbens and Athey)
Goodroe Healthcare Solutions' CathSource Data
- Every drug and device chosen by every physician for every patient.
- Hospitals' prices for those devices, net of rebates.
- Rich risk adjustment, per ACC's NCDR requirements.
- Timing and targets of gainsharing programs, participating physicians, and their practice affiliations.
- Either price targets alone, or price and utilization targets together.
Data in the analysis presented today
- 2001 through mid-2007.
- 13 gainsharing programs at 6 hospitals
- 161 physicians from 35 groups treated 58,399 patients under the programs.
- Physician group sizes ranged from 1 to 17 physicians.
- Data from 123 hospitals who did not participate in gainsharing programs but have the software.
- Two highest cost device categories: drug-eluting stents (DES) and bare metal stents (BMS)
- Per patient cost and quantity (risk adjusted)
- Per device price:
- and within-product to eliminate substitution effect
- Standardization on brand, and on prices at level of:
Insights from the Model
- Group incentives:
- Align MD and hospital incentives because of hospitals tiered contracts with device companies.
- Give MDs reasons to share information and monitor each other.
- Savings generated by
- Lower utilization
- Lower prices
- Greater hospital bargaining → standardization of prices.
- Greater contract compliance → standardization of brand.
- Actual standardization on brand may not occur, depending on the strength of physicians' preferences.
Results for Cost and Quantities per Patient
- Price targets alone: $315 drop (-14.2%) for DES, $42 drop (-10.6%) for BMS.
- Adding quantity targets: $444 drop for DES, but $87 increase for BMS due to substitution to them.
- 7.7% reduction in DES use offset by 24% increase in BMS use.
- $358 total reduction in stent cost per PCI patient under either type of targets.
Results for Prices per Stent
- DES $120 (4.7%) reduction
- BMS $107 (10%) reduction
- BMS $86 reduction
- DES $123 reduction
- → Primarily from bargaining and compliance, not substitution, particularly for DES.
Results for Standardization
- Measured by
- Hospital-specific brand concentration (an HHI)
- Variation In prices
- For BMS, standardization on brand, and convergence of prices at MD, group and hospital levels.
- For DES, no standardization on brand, but convergence of prices.
- Gainsharing promoted price competition among manufacturers.
- Theoretically, group incentives have advantages.
- Gainsharing lowered costs.
- Greatest for the most costly groups.
- No differences by group size or composition (preliminary).
- Reductions came primarily from lower prices, some from lower utilization.
- Actual standardization in one category.
- But convergence of manufacturers' prices in another.
- Effects depend on the strength of MD preferences.