The ethical aspects of gain sharing with physicians

Physician Executive, May-June, 2004 by Richard E. Thompson

Gain sharing aligns the economic interests of company executives and employees. Hoped for results include:

* Increased profit

* Consistently dependable workmanship (quality)

* Better communication

* Support of the company's executive leadership

All these goals also relate to working with doctors. Physicians determine the variable costs of treating patients by writing orders and deciding to do complex diagnostic and surgical procedures. Through the order sheet in each patient's medical record, doctors determine the daily activities of many hospital employees, including nurses, therapists and technicians.

The doctor decides when a patient is ready for discharge from the hospital, and so determines average length of stay. Physicians are involved in most clinical systems used in caring for individual patients, so it is difficult or impossible to make needed improvements in clinical systems without physician participation or leadership.

So gain sharing with physicians makes a lot of sense. There is just one catch.

The powerful Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) does not like the idea.

In 1999, the OIG issued a special advisory bulletin essentially outlawing gain sharing with physicians. (1) In particular, the bulletin called attention to the civil monetary penalties (CMP) of the Social Security Act. The penalties can be imposed on hospitals that pay individual physicians as an inducement to reduce or limit services medically necessary to Medicare or Medicaid beneficiaries.

Thus, it seems that the OIG assumed that all gain sharing with physicians would involve cutting needed services. That is not the case. The OIG has recanted somewhat and now agrees to consider specific gain sharing plans for approval, but remains skeptical. (2)

Why? What could possibly be unethical about gain sharing, an idea that potentially aligns and simultaneously serves the best interests of patients, doctors and hospitals?

The answer is, "Nothing."

The idea of gain sharing with physicians reflects good business ethics such as concern for all stakeholders and avoidance of conflicts of interest. However, the specific characteristics of a gain sharing plan might be unethical.

* Is lip service to quality a cover up for attempts to cut costs, with more attention to corporate profit than to patient safety?

* Are gain sharing payments to physicians actually disguised efforts to buy physician loyalty?

* Are practitioners truly partners in deciding which efficient practices are safe for patients and which are not?

* Do selected data methods actually isolate the physician's contribution to observed findings, a necessity since the physician is the one paid for desirable results?

The OIG's concern is prophylactic. So far there is a paucity of actual experience with physician gain sharing, unless it is sub rosa, partly because of the OIG's wet blanket effect. So the OIG seems to be reacting to our track record.

Unfortunately, that is justifiable. Extremely close scrutiny of physician gain sharing plans is probably one legacy of the embarrassing gag order era early in managed care. Gag orders were alleged attempts to make physicians withhold from patients the knowledge that expensive diagnostic procedures and treatments were needed. No wonder the OIG wants to know exactly how we intend to implement gain sharing with physicians.

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Details of physician gain sharing plans reflect the hospital's operational code of ethics. A written code of ethics is the highly prized and flowery statement of absolute altruism prominently posted in many locations and shared liberally with the public in advertising copy. But the operational code of ethics is what happens after the boardroom door closes.

Every organization's operational code of ethics reflects a conscious or subconscious choice of where to stand on the continuum between ethical, legal, unethical and illegal actions.

The operational code of ethics cannot be kept secret, because it is revealed to the public by the nature of an organization's decisions and activities.

Gain-sharing scenarios

Here are two physician gainsharing scenarios. Without knowing more details, it would be unfair either to brand these plans unethical or praise them as good examples. But at least a comparison of these two contrasting stories illustrates the diversity that exists in physician gain sharing plans and activities.

1. This first scenario is a mixture of fact and fiction. In Hospital A, a cardiac surgery group agrees to 19 consultant recommendations about changes in surgical procedure in return for cash payments from the hospital to the surgical group. One change is that the disposable components of the cell saver unit, an autologous blood recovery system used in the case of rapid bleeding or high volume blood loss, are not opened until after the patient has already started to experience excessive bleeding. The criteria for "excessive bleeding" are not specifically stated. According to the efficiency experts recommending these changes, significant cost savings will result and the only difference is that the cell saver will be ready two to five minutes later than it is now. The other recommendation is to discontinue routine pre-operative administration of a drug currently used to try to prevent hemorrhaging during the operation.