The Project: Create digital report cards that rate 2,500 docs on 20 aspects of their care for insured patients.

The Payoff: Spots inefficiencies, saving $4 million a year. That has helped land $234 million in new health-insurance contracts.

Doctors had to ace lots of tests to get to medical school. Now they're getting report cards -- on the Web. To control skyrocketing medical costs, CareGroup Healthcare System has armed itself with a digital grading system. Called PSNWeb, CareGroup's system creates report cards that rate 2,500 doctors on the medical treatment, referrals, and drug and testing recommendations. In its four years of grading, it has pushed medical costs down.

How does it work? CareGroup, a six-hospital company in Boston, gathers data about the treatment that the network of doctors provides insured patients. Twenty different aspects of the doctors' care during the year are analyzed, including how many tests they order or how often they refer patients to more expensive out-of-network doctors. Managers who work with the doctors can spot trends and suggest adjustments, such as prescribing cheaper generic drugs.

McKinsey & Co. estimates that the digital report cards shave $4 million in annual costs. And the system has brought in new insurance contracts worth $234 million annually. This is just the kind of out-of-the-box idea that other companies might want to adopt in the face of rising health-care costs.

By Heather Green

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