Physician Hospital Collaboration Demonstration

This demonstration examined the effects of gainsharing aimed at improving the quality of care in a health delivery system. More specifically, the demonstration determined if gainsharing is an effective means of aligning financial incentives to enhance quality and efficiency of care across an entire system of care.


This demonstration examined approaches that involved long-term follow-up to assure both documented improvements in quality and reductions in the overall costs of care beyond the acute inpatient stay. CMS is particularly interested in demonstration designs that track patients well beyond a hospital episode, to determine the impact of hospital-physician collaborations on preventing short and longer-term complications, duplication of services, coordination of care across settings, and other quality improvements that hold great promise for eliminating preventable complications and unnecessary costs.

Initiative Details

PHCD was authorized under Section 646 of the Medicare Modernization Act of 2003. This provision was explicitly designed to promote higher-quality, better coordinated care. This demonstration examined the effects of the incentive payments system-wide, as hospitals and physicians within a geographic area collaborated on similar quality improvement initiatives and worked together to assure that appropriate longer-term outcomes and other quality measures could be tracked appropriately.

The demonstration was comprised of a consortium of twelve hospitals state-wide New Jersey, the New Jersey Care Consortium, that is administered by the New Jersey Hospital Association. Preference was given to projects developed and operated by a consortium of groups, with each consortium consisting of up to 12 physician groups and their affiliated hospitals in a single geographically contiguous area (state or metropolitan area), in which there is standardization of the quality improvement gainsharing activity, quality measures, internal cost measurement methodology, and gainsharing payment methodology.


Latest Evaluation Report

Additional Information

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