Thursday, September 10, 2009

Will Gainsharing Ever Work?

Recently it was reported in industry publications that a hospital-physician gainsharing project was piloted in the State of New Jersey. This program offers physicians the incentive to earn extra money by reducing procedure or test volume to meet the statewide standards. The Center for Medicare Services (CMS) announced the inception of the project in an attempt to assess the practice of hospitals providing incentive payments to physicians to implement cost-saving strategies. As of this writing, this program does not include medical devices.

Yet, the question must be asked; Are medical devices far behind? I know everyone thinks this idea is far fetched because as it stands "gainsharing" is illegal under Medicare statutes since it represents an opportunity for physicians to be financially induced to deliver substandard care. The physicians financially induced? The hospital that they practice at? The company that they consult for? Increasingly, policymakers view this practice as a way to reduce the growth rate of Medicare because when paired with controls it ensures quality aligning the physician with the hospital.

Many device manufacturers (the CEO's) have urged caution because they believe that these types of arrangements will inhibit surgeons' to choose the best tools to treat patients and to influence purchasing decisions, especially when it comes orthopedic and spine surgeons. PLEASE!!!!!!! Considering that so many surgeons have consulting agreements who is kidding whom, when our illustrious CEO's frown upon this platform. How many physicians use products from companies that their children or relatives work for? Is that not an inducement? As long as the physicians are involved in the decision making process, including monetary incentives to drive down cost, this has a chance of eventually coming to fruition. As the healthcare delivery model continues to evolve, how many surgeons are becoming employees of the hospital? Let's face it, with modern technology many of the products that we sell are equal in producing results. A pedicle screw is a pedicle screw, a cervical plate is a cervical plate, a TLIF is a TLIF etc, etc..... I know, some of you will argue that it's the instrumentation that makes a system, but how much of a difference does it really make? The Spine Blogger wants to know what you worker bees on the street think?


  1. I am currently involved in the commoditization of PEEK products for several different groups. Personally, I think that removing surgeon and company greed from the equation serves the patients and industry in general quite well.

    So far, "Thou dost protest too much" seems to shine the light on which companies/reps/surgeons are in bed with each other the most.

    At some point, the hammer of the gods will come down hard on this business. To the point where any forward-thinking business man will make necessary changes now, when they can control the situation rather than later, when the DOJ starts showing up demanding files, payment history, computers and cell phones. Which is already starting to happen, though in companies too small to be worthy of an Orthoworld press release I guess.

    How many reps will want to keep their mouths shut when the company that has been paying them 50% commission has to unceremoniously cut there commissions to a reasonable rate due to the tightening in the pricing we are seeing? Will some of them start making phone calls? Probably so in my opinion.

  2. a screw is a screw . . . I agree with the Top 7 or 8 companies. But there are sooooo many fly by night outfits with crap designs, crap instruments, and substandard manufacturing processes.

    We need a really big industry shakedown. Honestly, I'm shocked there haven't been more companies go under.

    Regarding RY Publications. I really surprised he hasn't pulled back the curtains on the "physician distributorships", "investment/consulting arrangements" and "nepotism" in this space. It's out of control. The problem is most of the guilty companies are just too damn small for the government to go after.