Joint venture SharedClarity adds McLaren to list of owners

McLaren Health Care Corp. is the latest health system to take an ownership stake in SharedClarity, a joint venture that pairs UnitedHealthcare's claims data with clinical data, medical studies and physician input to improve purchasing decisions for high-priced medical devices.

McLaren, a Flint, Mich.-based health system that operates 10 hospitals, joins Advocate Health Care, Baylor Scott & White Health, and Dignity Health as owners of SharedClarity. The Phoenix-based venture, which Dignity Health and UnitedHealthcare formed in 2012, launched in April of last year.

Amid declining reimbursement and a proliferation of new payment models that incentivize providers to reduce costs, hospitals are evaluating what they spend on medical and surgical supplies, which usually make up a hospital's largest expense after labor.

High-priced devices, such as hip implants and drug-eluting stents, make up a significant portion of supply spending, but little data exists that allows hospitals to compare the costs and outcomes of these devices. Factors such as gag clauses that limit what pricing information hospitals can share about devices they purchase and physicians' longstanding relationships with manufacturers and particular products are additional barriers for hospitals seeking to reduce costs of pricey physician preference items.

SharedClarity plans to evaluate the clinical outcomes of 30 devices and then use that information to develop contracts with better pricing for top-performing devices. Teams have completed clinical reviews of two products so far.

The venture still expects to add up to six additional health systems, said Mark West, SharedClarity's president. Now that SharedClarity is producing tangible results, it may be easier to persuade more hospitals to join, he said.

“We were selling a concept and model. It's vapor,” West said. “Over the last year we have gone into practice.”

Some hospitals purchase physician preference items through group purchasing organizations, while others contract directly with manufacturers. SharedClarity isn't the only new venture to target the costs of pricey medical devices. The Cleveland Clinic and VHA in 2013 formed a similar business that also aims to reduce the costs of these devices, and traditional GPOs also market their expertise in helping hospitals reduce the costs of physician preference items.

McLaren Health Care, which recently acquired the Barbara Ann Karmanos Cancer Institute and Port Huron Hospital in Detroit, expects to spend between $400 million and $500 million on supplies in 2014.

“If you could affect change on that base, it's a significant amount of money,” said Dave Mazurkiewicz, senior vice president and CFO for McLaren Health Care.

Reducing the costs of physician preference items isn't the only target for the organization. McLaren aims to cut at least $20 million out of its supply spend this year. Like many other hospital systems, it is evaluating all aspects of its supply chain, such as moving to a centralized warehouse model rather than keeping medical and surgical supplies at each individual facility.

“We're constantly fine-tuning and we're trying to make ourselves as efficient as possible,” Mazurkiewicz said.

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