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For ACO Adoption Success, Leave Cost Out of It

Karen Minich-Pourshadi, for HealthLeaders Media, June 18, 2012

"There are so many sub-components that need to be looked at; there's supply chain and scheduling efficiency and others. We brought in an outside consultant to help us identify savings opportunities and to validate when those savings are achieved. And then we also worked with our finance and analytics teams to review our numbers and validate that these are true savings," Knight explains.

The delayed attention to shared savings allowed physicians and the organization time to create a formula for calculating and validating shared savings. The next step is testing it; a contract between Palmetto Health System and the Palmetto Health Quality Collaborative was signed in February, giving participating physicians 10% of any realized saving for the $10 million in targeted OR cost reduction. To further the success of this new objective, Palmetto Health advanced the Quality Collaborative approximately $100,000 (a tenth of the 10% of the potential savings) to use toward training and vendor consolidation efforts.

Physicians on the Quality Collaborative board have already identified one area of potential savings: the use of reprocessed equipment for the OR. In the past, all OR equipment and tools was disposed of. After Quality Collaborative physicians examined data on the risk of infection from reprocessed equipment, they decided to hire a vendor to sterilize and return equipment in "like new" condition.

"If this idea had been presented as a cost-reduction effort, I think it might have been met with resistance [by physicians]. But because physicians drove the process and were concerned with safety and quality outcomes, the other doctors quickly accepted it and everyone has been very cooperative," Knight says. (Cost savings data from this recent initiative is not yet available.)

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