An analysis of gainsharing in a health care setting

This study examines the effect a gainsharing plan has had on the productivity of two hospitals. Previously, the hospitals had been using a set of ratios to determine changes in productivity. However, we use a nonparametric productivity measure because it simultaneously considers the relationship between the hospitals' inputs and outputs. Our results show that the gainsharing program had no significant effect on productivity in one hospital and a negative effect on productivity in the other hospital. These results raise questions as to whether gainsharing will help health care providers improve productivity.