Mary Washington ACO Reduces Variation, Drives $3.1 Million in Savings

Hospital Quality and Efficiency Program Initiative with Guidehouse Helps Decrease Joint Replacement and Cardiac Defibrillator Costs, Maintains Quality


In June 2015, Mary Washington Healthcare sought to develop a contracting vehicle with physicians that would formally align efforts to enhance clinical quality, financial performance, and operational efficiency.

Located in Fredericksburg, VA, Mary Washington is a two-hospital, 551-bed health system with a medical staff of more than 700. In early 2015, the health system launched Mary Washington Health Alliance, an accountable care organization (ACO) to participate in the Medicare Shared Savings Program. The ACO serves about 18,000 lives.


Mary Washington partnered with Guidehouse Inc. to successfully engage physicians in this effort through meaningful program initiatives, a structure that supports performance excellence, and compliance and compensation that drives value.

Leaders from the two organizations partnered to develop a Hospital Quality and Efficiency Program (HQEP), a contract between a health system and an ACO or clinically integrated network to improve hospital-based performance. HQEPs:

  • Increase physician engagement through short-term wins.
  • Serve as a vehicle for rewarding achievements around quality and efficiency while maintaining regulatory compliance.
  • Provide a funding mechanism for ACO infrastructure development.
  • Generate savings that provide a payback to the health system.

Once outside legal and valuation counsel reviewed the HQEP to verify it met standards for regulatory compliance, leaders from Mary Washington’s clinical, finance, and supply chain divisions worked with Guidehouse to:

  • Evaluate opportunities for clinical and operational performance improvement.
  • Establish work groups for each key initiative, with participation from a responsible pool of physicians (the top 80% of physicians who are actively engaged in the subset of the service line) and a coordinating pool (remaining sub-service line physicians who agreed to follow protocols developed by the responsible pool).
  • Provide detailed education to participating physicians and the physician network as a whole.

Mary Washington’s first HQEP initiatives, launched in January 2016, focused on reducing variations related to joint replacement surgery and cardiac defibrillator implants. Guidehouse research shows most hospitals could reduce their supply chain expenses by 18% — without affecting quality. A key way to do so: engage physicians through evidence-based protocols and data analytics to reduce variation in pricing, product use, and clinical outcomes. This information better equips supply departments to collaborate with physicians to standardize use of implantable devices and related supplies proven to produce clinically equivalent outcomes at a lower cost.

Furthermore, Mary Washington and Guidehouse developed protocols for inventory tracking and selection. Health system leaders also collaborated to establish qualifiers and standards for blood utilization.

Based on the success of these initiatives, a third performance excellence initiative, focused on spinal surgery, was launched in the second quarter of 2017.

Guidehouse’s innovative approach to clinical integration enables us to more successfully engage physicians in performance excellence initiatives. We’re able to share a greater portion of savings with physicians through the Hospital Quality and Efficiency Program than under a co-management agreement. The result is a higher-value approach to care.

Travis Turner,
Senior Vice President of Clinical Integration
Mary Washington Healthcare

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