Medical Gainsharing

“Gainsharing” is a management tool which is used in medicine to control overall costs of services.  Under Medicare, compensation to physicians and hospitals for a procedure are bundled, with each sharing financially from any cost savings they jointly can obtain in performing the procedure.

In principle, this is a way to reduce Medicare payments or, more reasonably, to limit annual increases in cost.

In practice, it may result in unintended results for patients.

Dyrda points out that physicians may change what they recommend to patients based on financial incentives.  That could include:

  • Selection of an inferior product for a joint replacement,
  • As surgical costs increase, cost cutting in post operative care, or
  • Refusal to perform surgical procedures on higher risk patients.

She also notes that there is no provision for patient preferences in gainsharing.

Is your doctor participating in gainsharing?  Do you know?


  1. Gail R. Wilensky, Nicholas Wolter and Michelle M. Fischer, “Gain Sharing: A Good Concept Getting A Bad Name?” Health Affairs, January 2007 vol. 26 no. 1 w58-w67.
  2. Laura Dyrda, “8 ethical concerns for total joint replacement gainsharing,” Becerk’s Spine Review, 6 March 2017.

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