What is Gainsharing?

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The word “gainsharing” is used often in healthcare, particularly in conversations around Bundled Payments and Value-Based Care.

Gainsharing is a term that refers to an agreement in which a hospital shares a percentage of its cost savings with physicians whose efforts helped lead to a reduction in overall hospital spending.

How does it work?

A gainsharing agreement involves a direct payment by the hospital to the physician when cost savings are achieved, as long as quality of care standards have been met.

In order to receive payment, the reduction in costs must not negatively affect the quality of care. The ultimate goal is to benefit the patient.

According to Dr. Alok Sharan, orthopedic spine surgeon with WESTMED Medical Group, “Gain sharing represents an attempt by the government to break down the silos that have developed between the hospital and physician. The hope is that by incentivizing collaboration among the two groups of providers, patients will benefit from truly integrated care.”

Pressure to save

With the onset of Value-Based Care initiatives, hospitals are facing financial pressures and are looking for ways to eliminate unnecessary spending. By sharing savings with physicians under gainsharing programs, hospitals incentivize doctors to actively engage in these cost-saving efforts.

Some examples of cost savings that do not adversely affect care quality are:

  • using lower cost but equally effective medical devices and items

  • reducing unnecessary usage of ancillary products

  • reducing longer-than-necessary lengths of stay for patients


Sources

"Gainsharing Arrangements and CMPs for Hospital." Office of Inspector General. N.p., n.d. Web. 27 June 2016.

Supin, Jo, and Anthony Stanowski. "6 Essential Differences between Gainsharing and Shared Savings Programs." Becker's Hospital CFO. N.p., 23 Sept. 2014. Web. 27 June 2016.