Position Statement

Gainsharing

This Position Statement was developed as an educational tool based on the opinion of the authors. It is not a product of a systematic review. Readers are encouraged to consider the information presented and reach their own conclusions.

Faced with the financial realities of a growing Medicare population, gainsharing arrangements between hospitals and physicians have caught the interest of federal policymakers, who are searching for ways to stimulate savings and improve operational and financial performance. In addition, hospitals have also been testing gainsharing and similar arrangements with physicians to reduce hospital costs.

While gainsharing arrangements violate the fraud and abuse laws, the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) has signaled through several recent advisory opinions that if the right safeguards are in place, they will not seek sanctions against hospitals and physicians for their participation in gainsharing arrangements.

There is no single uniform definition of gainsharing, but in health care the term generally refers to arrangements between hospitals and physicians to share in the cost savings that result from specific actions to improve the efficiency of care delivery. In true gainsharing arrangements, physicians are directly paid a portion of the savings. In similar hybrid arrangements, the savings generated goes to other hospital, medical technology or patient care improvements, which have generally been sanctioned by the physicians involved.

While there are a range of models, gainsharing arrangements can be primarily categorized as either “supply-based purchasing” agreements or “hospital-based cost savings” programs (“value improvement initiatives, “qualitysharing”). Supply-based purchasing typically involves hospitals and physicians entering into exclusive contracts with vendors to limit the types of supplies and devices used, creating reductions in costs. In hospital-based models, the focus is on developing cost saving protocols at the hospital, which can include making improvements in patient outcomes, costs, and best practices.

The AAOS believes that physicians should be involved in developing supply-based arrangements. However, the AAOS is opposed to supply-based purchasing arrangements where the cost savings obtained is disbursed directly to physicians rather than used to enhance patient care through other hospital improvements.

Furthermore, the AAOS is opposed to any gainsharing or similar arrangements that deny physicians the opportunity to select and utilize appropriate supplies and devices. The clinical judgment of the surgeon, in concert with the patient’s unique needs and preferences, should drive patient care decisions, not the financial gain of the facility and surgeons. Healthcare decisions should always be achieved through cooperation among the orthopaedic surgeon, the patient (and family) and a coordinated health care team.

The potential for hospital-based cost savings arrangements to control costs and save money over the long run is largely untested. Despite this, the overall concept of physicians, hospitals and government agencies working together to develop plans to decrease costs while maintaining quality has significant merit.

The AAOS believes that the burden to affect cost savings rests on all participants in the health care system -- hospitals, industry, insurers, as well as physicians. Orthopaedic surgeons need to be knowledgeable about how their medical decisions affect costs, while ensuring that they are able to make proper choices in the best interest of patients consistent with the best available evidence. Orthopaedic surgeons should continuously work to improve the quality and cost-efficiency of patients’ outcomes, regardless of any financial benefit. As part of a collaborative effort, orthopaedic surgeons within a hospital can cooperate in developing cost-containment strategies as long as patient care is never compromised, the proper safeguards are in place, and any compensation for this work is fair and reasonable and not directly tied to revenue gains.

Ethical considerations of gainsharing

The AAOS Principles of Medical Ethics and Professionalism in Orthopaedic Surgery state that: “The orthopaedic profession exists for the primary purpose of caring for the patient. The physician-patient relationship is the central focus of all ethical concerns. The orthopaedic surgeon should be dedicated to providing competent medical service with compassion and respect.”

Gainsharing arrangements have the potential to create a conflict of interest for physicians. The AAOS Principles take a patient-centered care approach to this issue: “Wherever a conflict of interest arises, it must be resolved in the best interest of the patient. The orthopaedic surgeon should exercise all reasonable alternatives to ensure that the most appropriate care is provided to the patient.”

The AAOS believes that the orthopaedic surgeon’s first duty is always to the patient. AAOS therefore is opposed to any gainsharing or similar arrangement that will ultimately lead to a reduction in the quality of patient care. No agreement should ever compromise patient care, nor create a real (or apparent) conflict of interest between the patient and the physician. A gainsharing agreement should never provide incentives for physicians to limit care or provide unnecessary care. A hospital’s attempt to control costs and maintain clinical programs should not interfere with the surgeon’s goal of providing the highest quality care and serving the patient’s best interest.

© September 2006 American Academy of Orthopaedic Surgeons

This material may not be modified without the express written permission of the American Academy of Orthopaedic Surgeons^®.

Position Statement 1171

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