Originally Published MX May/June 2005

BUSINESS NEWS

In the lexicon of medical device manufacturing, gainsharing isn't a term that has broad recognition. But medtech manufacturers may soon find themselves undertaking a crash course in the concept, now that the U.S. Department of Health and Human Services Office of Inspector General (OIG) has approved a number of gainsharing arrangements.

According to OIG, gainsharing is "an arrangement in which a hospital gives physicians a percentage share of certain reductions in the hospital's costs for patient care attributable in part to the physicians' efforts."

In 1999, following an initial advisory that the practice of gainsharing violated federal law, OIG began to review several gainsharing models that showed potential for maintaining or enhancing healthcare quality while reducing costs and not violating any statutes. A favorable ruling was first obtained in January 2001.