Using Gainsharing to Align Incentives for Medical Management

Gainsharing has been re-introduced as a means of achieving collaboration between a hospital and a group of physicians to achieve high performance. Gainsharing can actively manage the variable costs of major procedures without decreasing the quality of care being provided.

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"Gainsharing" has had a checkered past in the health industry.

Gainsharing is broadly defined as an arrangement in which hospitals give physicians a share of the reductions in the cost for patient care that are attributable, in part, to their efforts.

In the past, the Office of Inspector General (OIG), which has regulatory oversight responsibility for gainsharing practices, expressed concern that gainsharing could potentially harm patient care, and therefore it was declared illegal.

But after 2001, the ban was lifted. Accenture's experience, industry knowledge and research have found that gainsharing can be an effective option for health organizations in three respects:

• Acting proactively: To gain support for cost-reduction opportunities.
  
  
• Acting defensively: To meet a competitive threat from another community provider.
  
  
• Transitioning to "pay-for-performance": To form a foundation for programs where physicians measure both quality and financial goals.

Gainsharing can be successful for all parties, including patients, if the physicians and hospitals look beyond cost of care and supplies and focus on quality of care.

Gainsharing can help health organizations on their journey to high performance by creating a win-win scenario that benefits patients, physicians and hospitals through lower costs and higher quality.

Given the regulatory environment and consumer concerns regarding patient safety, gainsharing agreements will need to go through a rigorous process to ensure they do not compromise quality of care. To adequately quantify and document gainsharing information the providers will need to have:

• Close collaboration with physicians and other clinicians.
  
  
• The ability to influence not only the supplies used, but the clinician's workflow.
  
  
• Access to clinical outcomes and quality performance data by leveraging clinical information systems.

There are three types of agreements that balance the extremes of cost reduction and quality of care: managed care contracting agreements, gainsharing agreements and asset joint venture agreements.

For physicians and hospitals to advance toward high performance, gainsharing programs need to address the quality of care through collaborative approaches with clinicians.

Accenture believes gainsharing programs need to follow several guiding principles:

• Physicians need to be brought into the equation to create a high-performance organization.
  
  
• All aspects of the physician-controlled care delivery processes need to be incorporated, since clinical process transformation alone will not create sustained change.
  
  
• New systems and technology should address the needs and motivation of the providers of care in order to produce greater performance improvements.
  
  
• There should be a focus on physician leadership to support organizational change efforts and sustained performance.

Accenture recommends the adoption of a phased, results-oriented approach to gainsharing. Such an approach would include phases for assessment, creation of an architecture plan, construction of guiding policies and implementation.

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