Gainsharing is a system of management used to reduce costs by motivating providers and/or employees to improve their performance through involvement and participation. As costs are reduced without corresponding reduction of quality or capacity, participants share financially in the gain (improvement).
There are two important parts of a Gainsharing project.
- A bonus calculation.
- A structured system for participant involvement.
The CostFlex Activity Based Costing system is ideal for the bonus calculation part.
The second part is more involved and will probably require the hospital to engage legal and consultant specialists to gain the approval of the OIG (U.S. Office of Inspector General) and the CMS (Centers for Medicare and Medicaid Services) for the specific project being designed.
These approvals are made necessary due to the Stark II Law enacted in 1985 prohibiting physicians from referring a patient for services in which the physician has a financial relationship, unless an exception to the law is met; and, the 1999 U. S. Office of Inspector General Special Advisory Bulletin prohibiting gainsharing due to absence of proper safeguards “Gainsharing Arrangements and CMPs” (Civil Monetary Penalties).
Five or six dozen projects have been approved and implemented over the past 10 years proving the feasibility and benefits of the approach.