Gainsharing Issue Heats Up

Maybe gainsharing isn’t the answer, after all. A recent nationwide survey of physicians commissioned by industry association AdvaMed (Washington, DC) has revealed widespread disapproval of the concept, even among those most likely to benefit from its incentives. The survey suggests that medical professionals may join the ranks of those who have already expressed resistance to the concept, including medtech manufacturers and patient advocacy groups.

Gainsharing is an arrangement in which a hospital gives physicians a percentage share of certain reductions in the hospital’s costs. Typically, gainsharing initiatives attempt to standardize the use of medical devices for a particular procedure to either a single supplier or to a limited and predetermined list of hospital-approved vendors.

Opponents of gainsharing assert that the practice limits physician use of—and patient access to—many of the latest advances in medical technology. Proponents say gainsharing will enable hospitals to save money by buying in volume from particular medtech manufacturers or distributors. Under the gainsharing model, a portion of these savings is passed on to participating physicians.

However, the AdvaMed survey, conducted by national polling and market research firm Harris Interactive Inc. (Rochester, NY), suggests that physician support for gainsharing might not be as robust as previously thought. According to the survey, more than 70% of the responding physicians agreed with the statement that “Hospitals should not limit physicians’ choice of medical devices and offer a financial benefit to those physicians just to save the hospital money.” Physicians ranked the statement on a seven-point scale, where a ranking of 7 meant “completely agree” and a ranking of 1 meant “completely disagree.” Of the surveyed physicians, 72% responded to the question with a ranking of 5 or greater. Only 13% responded with a ranking of 1 to 3.

AdvaMed’s Ubl: A risky gamble.

Commenting on the survey, AdvaMed president Stephen Ubl said, “These measures have strong opposition from doctors . . . who are clearly concerned about losing their choice of treatment options. Gainsharing could undermine the use of advanced medical technologies, reduce innovation, and compromise the physician–patient relationship. It could be a risky gamble with patient health and technological innovation—and physicians know it.”

MSI’s Prodger: Finding physician support.

The AdvaMed survey, however, is far from the final word on the matter. Preliminary findings from a survey by Market Strategies Inc. (MSI; Livonia, MI) reveals that “physicians participating in the MSI study, especially those currently involved in gainsharing arrangements, are very supportive of the concept.” The MSI study is described by Mark Prodger, vice president of MSI’s medical device and equipment research and consulting group, as “the first in-depth look at how hospital administrators and physicians are, under the new guidelines, leveraging gainsharing to address rising costs while at the same time maintaining a high standard of cardiovascular patient care.” Many surveyed physicians said that gainsharing would not compromise care, which “may actually be enhanced as a result of standardization in the areas of product utilization and procedure methodology.” Prodger says that, according to hospital administrators, “the impact on cardiovascular medical device companies is just starting to be felt.” MSI’s complete report, A Market Assessment of the Attitudes, Perceptions, and Intentions of Cardiovascular Physicians and Hospitals Regarding Gainsharing Arrangements, will be released later this month.

Johnson: Convening both sides.

Both the AdvaMed and MSI findings were released just prior to a congressional hearing on gainsharing, convened by Nancy Johnson (R–CT), chair of the subcommittee on health of the House Committee on Ways and Means.

GHS’s Goodroe: The first in gainsharing.

In prepared testimony before the subcommittee, Joane H. Goodroe, president and CEO of Goodroe Healthcare Solutions LLC (GHS; Norcross, GA), said, “ If you look at 50 physicians performing the same procedures, you will see 50 different ways the procedure is performed. Gainsharing is a process where the physicians study how colleagues perform their procedures and best determine which processes to adopt in order to increase efficiency while assuring quality. It’s simply physicians assuring that patients have access to all needed technology in order to deliver the best quality care while eliminating waste in the system.”

The U.S. Department of Health and Human Services Office of the Inspector General (OIG) ruled the practice of gainsharing illegal in 1999. However, it subsequently approved the practice, under stringent guidelines, in 2001. The gainsharing model developed by GHS was the first to receive approval from the OIG .

In the subcommittee hearing, OIG chief counsel Lewis Morris said that gainsharing arrangements have to be based on “accountability, quality controls that ensure that patient care is not compromised, and safeguards against payment for referrals. Properly structured, gainsharing arrangements may offer opportunities for hospitals to reduce costs without causing inappropriate reductions in medical services.”

Emerson: An immediate threat.

Martin Emerson, president and CEO of American Medical Systems (Minnetonka, MN), testified in the hearing on behalf of AdvaMed. Noting that gainsharing arrangements had previously been considered illegal under federal antikickback statutes, Emerson said that adoption of the practice “ would have an immediate and significant negative effect on public health by encouraging the use of the least expensive option without consideration of long-term effects or overall health economics. If not designed with adequate safeguards for patients, gainsharing could easily reward cheaper treatments, not better treatments.” Emerson also said that “ gainsharing’s standardization measures would create an anticompetitive marketplace where the largest manufacturers would have a significant advantage.”

Carter: Ready to participate.

Gary S. Carter, president and CEO of the New Jersey Hospital Association and Affiliates (Princeton, NJ) testified in support of gainsharing arrangements. He said he welcomed the opportunity to participate in a program that would align the incentives of physicians and hospitals. Carter emphasized that the key to successful implementation of gainsharing is detailed and careful monitoring of clinical quality.

Jeffrey Rich, MD, chairman of the taskforce on pay-for-performance of the Society of Thoracic Surgeons (Chicago), made the case for what he called “quality sharing.” Rich said that gainsharing initiatives designed to coordinate supply efforts and reduce costs “can be appropriate with routine items used in care delivery, such as gloves, masks, intravenous tubing, and other medical supplies where clinical indication and outcomes are not significantly impacted.” Yet, he added that gainsharing arrangements should not restrict a physician’s choice of the most beneficial clinical device or treatment solely on the basis of cost, particularly in regard to advanced technology and devices such as heart valves and artificial joints.

AAPD’s Imparato: Urging caution.

Andrew J. Imparato, president and CEO of the American Association of People with Disabilities (AAPD; Washington, DC), urged the subcommittee to move with great caution. “In a gainsharing system that rewards physicians for producing short-term savings, it is unclear that doctors will have the right incentives to take a long-term view about what equipment and procedures will produce the best long-term outcomes for a particular patient. In such an environment, savings may be short-lived and patient health and quality –of life are likely to suffer.”

Stark: A dissenting voice.

Citing the current Department of Justice investigation of relationships between clinicians and leading orthopedic manufacturers, Representative Pete Stark (D–CA), ranking member of the Committee on Ways and Means, said, “ It is highly likely that at least some of these relationships include illegal kickbacks.” He added, “We should be considering ways to curb these relationships, not propagate them by undoing the few protections we have in the law.”

Although not testifying before the subcommittee, the Medical Device Manufacturers Association (MDMA; Washington, DC) states “any arrangement that provides doctors with a financial incentive to modify patient treatment or limit physician choice presents grave concerns regarding quality of care and the future of medical device innovation.” MDMA recognizes the need to control rising hospital costs, but states that gainsharing “is not an effective or adequate way to achieve these results.” The association has issued an action alert, calling upon its member companies to “urge Congress to oppose any legislation that would legalize gainsharing agreements in health care.”

The concept of gainsharing will likely continue to generate a great deal of discussion and debate among physicians, hospital administrators, patient advocacy groups, insurance firms, regulatory agencies, and medtech manufacturers.

A spokesperson for the House subcommittee on health said that no decision has yet been made about whether additional hearings on gainsharing will be held. There is currently no proposed legislation on gainsharing in either the House or the Senate. Additional information about gainsharing is available from the subcommittee’s Web site at http://waysandmeans.house.gov/hearings.asp?formmode=detail&hearing=446.

© 2005 Canon Communications LLC

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