Financial help for hospitals may come from gainsharing

As FierceHealthcare readers know, hospitals are facing pitched battles to stay afloat. With investment dollars scarce or non-existent, however, they can't roll out new facilities or service lines and hope the new cash will keep their margins healthy.

However, it's important that hospitals not lose sight of their other options, notes Newton, MA-based attorney and consultant David Harlow, who spoke with me this week. "Too often in the past, hospitals have looked at expansion and capital improvements to expand the bottom line, but that's not an option right now," Harlow says. "[But] nobody's going to build a $200 million wing, because they can't finance it right now."

To survive these times, Harlow says, it's critical to focus on aligning the interests of the hospitals and physicians and insure that the relationship is more collaborative. "There's often the belief that it's a zero-sum game--that if something is given to the physicians, that it's a cost to the hospital," Harlow argues. "They have to get outside that way of thinking."

As Harlow sees it, hospitals should consider include a variety of gainsharing plays:

* Traditional gainsharing: Sharing whatever benefits physician-hospital collaboration produces can be a viable option if done carefully, he notes, though it's important to do it right. "To follow specific advisories issued by the OIG, you have to share funds with physicians in very structured ways."

* Participating in a CMS demonstration project: CMS has been experimenting with programs that allow for new forms of gainsharing, in an effort to see what impact that has on quality and access to services. Hospitals should seek those out and consider signing up, he says.

* Virtual gainsharing:  An alternate form of gainsharing is "virtual gainsharing," in which hospitals can work with physicians to reduce hospital costs, then in return, invest in  specific items that doctors want. "A hospital can say, well, if you can reduce the cost of procedure X by $10,000, we can have dollars in the bank to give you what you want," Harlow notes.

Turning to collaborative strategies like these is simply a necessity in these times, Harlow says. "The thing is to reduce costs," Harlow says, "Because I don't think increasing revenues is in the cards." - Anne