HCA Inc. is the first of what might be many hospital chains offering doctors a portion of the savings by chosing a less expensive option when it comes to implants (mostly orthopedic implants at this point). Termed “gain sharing,” the idea has device manufacturers pitted against hospitals and US regulators trying to cut Medicare costs. Reuters reports:
“We want to be careful it doesn’t result in just putting in cheap implants and going to the lowest common denominator,” Stryker Corp. Chief Executive Stephen MacMillan said this week at the Cleveland Clinic’s Medical Innovation Summit.
Gain-sharing can involve various types of cost-cutting. Under one version, hospitals provide doctors with financial incentives to switch to an approved vendor to give the hospital more leverage in contract negotiations with the device maker.
Analysts say the deals could lead to pricing pressure for device makers, who have enjoyed price gains of about 3 percent to 5 percent a year for several years.
But the U.S. Department of Health and Human Services inspector general has approved seven plans it said were carefully crafted to protect patients, and it is considering another proposal by HCA Inc.
But the U.S. Department of Health and Human Services inspector general has approved seven plans it said were carefully crafted to protect patients, and it is considering another proposal by HCA Inc.
HCA has entered into gain-sharing contracts with three orthopedic device makers — Stryker, Zimmer Holdings Inc. and Johnson & Johnson’s DePuy unit, HCA spokesman Jeff Prescott said.
“We had a panel of orthopedic physicians describe to us the best devices, and we then approached those manufacturers, thus ensuring that those on contract were recognized as producing high-quality devices,” Prescott said.
Several protections were included, such as requiring a review of patient outcomes, Prescott said.
Doctors traditionally hate having their choices regulated by administrative types, so offering incentives to go with a cheaper option certainly beats forcing the cheapest option on them. However, if hospitals can offer doctors “gain sharing” for going with a cheaper implant, can device companies offer “gain sharing” for going with a more expensive one?