12 NJ hospitals try new cost-cutting incentives

August 19, 2009 7:15:55 AM PDT
A dozen New Jersey hospitals are about to conduct a major experiment in a new way to encourage doctors to cut costs. The three-year Medicare program will let hospitals pay doctors for saving them money.

The program is intended to address a conflict in the Medicare payment system. Hospitals are paid a lump sum based on each patient's diagnosis. But doctors are paid for each service they provide the patient.

The hospitals in the experiment will reward doctors for cutting costs by reducing patient stays, lowering readmission rates and avoiding expensive technology when it's not needed.

The program is voluntary for doctors, but most at the participating hospitals have signed up.


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