Gain sharing: a good concept getting a bad name?

The introduction of diagnosis-related groups (DRGs) created a clear misalignment between the incentives facing hospitals and those facing physicians. The interest in gain sharing that developed in the 1990s represented an attempt by physicians to extract and hospitals to offer some of the savings being produced by physicians. Advisory bulletins by the Office of Inspector General (Department of Health and Human Services) quickly put a stop to further interest in these strategies. Newer, narrowly defined types of gain sharing have been under consideration. More broadly defined strategies that will be tested under a new Centers for Medicare and Medicaid Services demonstration are more promising.