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Gain sharing: a good concept getting a bad name?
Gail R Wilensky1, Nicholas Wolter, Michelle M Fischer
1Project HOPE, Bethesda, Maryland, USA. gwilensky@projecthope.org
Health Affairs (Project Hope)
|December 7, 2006
Summary
Diagnosis-related groups (DRGs) created misaligned incentives between hospitals and physicians. Gain-sharing strategies evolved, facing regulatory hurdles, but broader approaches show promise for future healthcare payment reform.
Area of Science:
- Healthcare economics
- Health policy analysis
- Physician-hospital financial alignment
Background:
- Diagnosis-related groups (DRGs) altered financial incentives, creating a disconnect between hospital and physician interests.
- Physician-led gain-sharing initiatives emerged in the 1990s seeking to capture savings, but faced regulatory challenges.
- Past attempts at gain-sharing were curtailed by advisory bulletins from the Office of Inspector General.
Purpose of the Study:
- To analyze the historical evolution of physician-hospital financial alignment strategies.
- To evaluate the impact of regulatory actions on gain-sharing initiatives.
- To identify promising future models for aligning healthcare provider incentives.
Main Methods:
- Historical review of healthcare payment models and regulatory guidance.
- Analysis of physician-hospital financial incentive structures.
- Examination of evolving gain-sharing concepts and pilot programs.
Main Results:
- The introduction of DRGs fundamentally misaligned hospital and physician financial incentives.
- Regulatory scrutiny from the Office of Inspector General significantly limited early gain-sharing models.
- Current considerations include narrowly defined gain-sharing and broader strategies in new CMS demonstrations.
Conclusions:
- Addressing the misalignment created by DRGs requires innovative financial strategies.
- Regulatory frameworks significantly influence the feasibility and design of gain-sharing programs.
- Broader, systematically tested gain-sharing models hold greater potential for future success.
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