Overlook Hospital is teaming up with 11 other New Jersey hospitals in an experiment to see if they can lower costs yet maintain or improve quality of care.

The Physician Hospital Collaboration Demonstration is a 3-year project being spearheaded by the New Jersey Hospital Association and conducted by the U.S. Centers for Medicare and Medicaid Services, to see if doctors and hospitals can resolve a fundamental difference in compensation: doctors are paid a fee per service for each procedure or visit while hospitals get compensated based on diagnosis no matter how long the stay.

“Gainsharing is an opportunity for physicians and the hospital to get together and understand and explore the things that drive cost and the elements of quality and in that dialogue we believe that we’ll be able to improve efficiency at the same time maintain quality of care,” said Dr. Norman Luka, medical director of clinical affairs at Overlook.

These cost savings, he said, can be shared with physicians through bonus compensation but can also be reinvested in the system in things such as infrastructure, training and new equipment.

One way to streamline care, Luka said, is to engage physicians to find out areas where obstacles, unnecessary delays and redundancies can be eliminated.

Luka said many of Overlook’s patients come through the emergency room. The gainsharing program hopes to look at how to expedite the process when it is decided a patient is going to be admitted. The program will also look at readmission rates to determine if patients are being properly discharged and also at post-acute tracking, which will check up on patients post-operatively to see how they are recovering.

Many of the things Overlook will be doing in this program are practices that the hospital has already started adopting, Luka said. So the decision to team up with area hospitals was an easy one.

“Alan (Lieber, president of Overlook Hospital) and I both felt that we were kinda ready to do this because it requires that we have a willing partner–the physicians,” he said. “I felt that we were ready to embark on this journey of discovery, this experiment, to figure out if we work together, share data, think about how we can be more efficient in our care that we would end up reducing cost but at the same time improve quality.”

For example, X-rays, lab test results and vital signs are all available electronically, eliminating some of the paper records that slows down the process.

The program will also monitor the hospitals' reliance on costly tests to make diagnoses.

“That’s again part of what gainsharing is trying to do is to reward the physician for their intellectual work, for their knowledge base, and not relying on a whole series of tests that may or may not help you in getting to the answer,” Luka said. “What we want to do is deliver to each patient the right technology in the amount that’s needed–no more, no less.”

But Luka said from the patient’s perspective, these change may be subtle.

“I think that the patient’s individual experience at the moment they’re going through the care, they may or may not notice any difference,” he said. “What they might notice is if they’ve been in the hospital before and they spent a long time in the ER waiting for a bed that maybe that’s gotten shorter.”

While it’s premature to say whether or not this program will be a success, Luka said he knows it will prove useful.

“I believe at Overlook we will demonstrate that we can cut costs and maintain quality,” he said. “I am confident that we will have learnings from this consortium that will be important, if the government chooses to listen and pay attention to it, in how we render care and how that care is compensated.”