Gainsharing: An Alternative To ACOs?

By Ken Congdon, Editor In Chief, Health IT Outcomes

According to a 2009 report titled Guided Care and the Cost of Complex Healthcare: A Preliminary Report, physicians directly control more than 80% of total medical costs. With this in mind, it's no wonder that healthcare costs in the United States have spiraled out of control. Our current fee-for-service reimbursement model actually encourages medical procedures and the use of hospital resources. Healthcare reform aims to address this issue by charging a network of physicians and healthcare facilities in a region, known as an ACO (accountable care organization) with the overall care of its collective patients. Furthermore, members of these ACOs will be reimbursed based on patient outcomes as opposed to the services delivered or procedures performed.

The ACO concept seems like a logical and valid approach to cutting overall healthcare costs while improving the quality of patient care. The problem is the ACO final rule issued by CMS outlining the parameters for what constitutes an ACO eligible for Medicaid/Medicare reimbursement has been met with much criticism and concern in the industry. A primary point of contention is the huge cost and difficulty of establishing the infrastructure necessary to support the complexity of a CMS-defined ACO.

While many healthcare providers are still struggling to make the decision as to whether or not to begin making the changes necessary to build a CMS-approved ACO, a select few have been busy creating their own processes for ensuring accountable care. One such process, which has received little fanfare in the healthcare industry, is known as gainsharing. Gainsharing is a pay-for-performance program that incentivizes physicians to improve patient care, increase operational efficiencies, and reduce the costs associated with medical procedures by paying doctors a percentage of the savings they generate. Think of it as a profit-sharing program for doctors.

GAINSHARING BASICS
To embark on a gainsharing initiative, a hospital needs to be able to accurately track the costs attributed to specific medical procedures. Furthermore, the hospital needs to be able to evaluate the cost variance that exists among physicians for the same procedure. Analysis of these hospital costs can be as broad or narrow as necessary, depending on the hospital. For example, some hospitals may only need to (or choose to) focus on a single area, such as surgical cases, ICU utilization, cardiac admissions, orthopedic (i.e. joint replacement) procedures, etc., while others may choose to focus on multiple areas. The goal is to focus on those medical procedures that have the greatest opportunity for improvement and savings. That is, areas that have the largest cost variance between the best performing physicians (i.e. doctors that perform a procedure at the lowest cost) and the worst performing physicians (i.e. doctors that perform a procedure at the highest cost).

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