Gainsharing at Sg2
BY JOHN CHOPACK, AUGUST 15, 2005
This is our final report regarding the Orthopedic Intelligence Conference conducted by Sg2. We wanted to highlight what we considered to be the most significant aspect of the conference -- gainsharing -- a hot topic that has received significant attention from the press. As we explained in previous posts, gainsharing is a mechanism in which physicians have the opportunity to share the financial benefits from cutting healthcare expenses of their procedures. Our thoughts are not regarding the concept or mechanism of gainsharing, or its potential impact, but rather how one individual won a battle where she felt passionately.
How did she do it - by collecting accurate data. It's that simple. Yet, it is the key aspect that has been missing in the orthopedic and the healthcare sector for years. Joanne Goodroe gave a bullet proof presentation regarding how she, almost single-handidly, changed the opinion of the government regarding gainsharing within the cardiovascular sector. We found the means by which Ms. Goodroe collected her data most compelling. She persuaded surgeons to provide detailed information about the products they used on a case by case basis. Ms. Goodroe collected and analyzed the data, then presented her findings to the government to support her case. During her presentation at the Orthopedic Intelligence Conference, she told the audience the same can be done in the orthopedic space. We agree - but who is going to do it?
To date, Ms. Goodroe has been one of the few healthcare professionals to collect data and fight for policy reform. However, you expect hospitals would have been collecting data on every procedure conducted at their facilities for years. While what Ms. Goodroe accomplished is impressive, we were shocked that hospitals are not conducting even this elementary business practice. Furthermore, most hospitals in this country have little, if any, concept of the cost structure details of each procedure being conducted at their facility. This lack of knowledge placed the hospital community in a poor negotiating position with their vendors. Hospitals vendors not only know their business a lot better than the hospitals, but we believe that they know the economics of hospitals better than the hospitals themselves. This significant advantage for the vendors hurts the hospital community financially.
During various presentations, we heard several things that, in our opinion, demonstrated hospitals' lack of knowledge and control of their economic and business processes. One story related to sales representatives - billing the hospitals for 10 or more spinal cages for a 1 or 2 level fusion. The presenter portrayed the hospitals as victims. We agree, victims of their own ignorance. Who wouldn't be able to determine that you can't physically fit 10 spinal cages into two vertebra? As a business, if you don't have the internal processes intact to make sure you are not being taken advantage of, shame on you. This same presenter, later told a story about direct-to-consumer advertising. It related to a patient investigating femoral hip resurfacing. We think he was trying to demonstrate patients don't need that amount of information about orthopedic implants available online (We would disagree - but that is another topic entirely). The presenter asked the question, "Who in the audience has ever heard of femoral hip resurfacing?" No one raised their hand. We were stunned. This is not new technology. It has been FDA approved for years. Total femoral hip resurfacing is currently undergoing clinical trials, but hemi-femoral hip resurfacing has been used for over a decade. How can a hospital negotiate fair pricing with vendors when it doesn't understand what it is buying?
We took away one major thought from Ms. Goodroe's presentation. Taking time, doing detailed research and collecting data builds a strong case for your argument. Until then, you don't have a leg to stand on. You're not making an argument, just complaining.
