A Modern Healthcare article noted: ”Society wants the healthcare system to improve the population’s overall health while caring for the sick at a lower overall cost. The term of art is providing value-based care. Yet system leaders are stuck with a reimbursement system that still rewards volume through fee-for-service medicine.”
“Those differing approaches to providing healthcare—actually, only value-based care can truly be called healthcare since fee-for-service medicine is more properly called sick care—present providers with two diametrically opposed incentive schemes.”
“Under fee-for-service, the more you do, the more you get paid. Dr. Atul Gawande, citing his own research, told attendees at this year’s Healthcare Financial Management Association’s Annual National Institute that margins at hospitals performing one complicated surgery rose from $17,000 to $56,000 after things went wrong. ‘The incentives are perverse,’ he said.”
“The goal of value-based care is just the opposite. The goal is to keep people out of the hospital and out of the nursing home or rehabilitation facility by encouraging wellness and prevention, coordinating care so repeat episodes are minimized, reducing errors and eliminating wasteful tests and procedures.”
“Yet in a fee-for-service world, those strategies are self-destructive. They cost money to implement, erode top-line revenue for physicians and institutions, and provide no financial reward for the effort.”
“The first response to living in this bifurcated world is consolidation and vertical integration. The wholesale move by large hospital systems to buy, merge and partner with other hospitals, physician practices and post-acute-care organizations is an effort to get ready for the day when fee-for-service is no longer the norm and most payers have moved to some form of risk-based accountable care.”
“That’s where the final piece of the integration puzzle comes in. The boldest provider organizations are expanding their efforts to assume financial risk for the populations whose health they manage. The role models are well known: Kaiser Permanente, Geisinger Health System, GroupHealth Cooperative in Seattle. They not only offer integrated delivery networks, but the insurance products that pay for them.”
Click here to read the full Modern Healthcare article “Fee-for-service thwarts value-based care’s intention” by Merrill Goozner.
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Doctor, Did You Wash Your Hands? ™ provides information to consumers on understanding, managing and navigating health care options.
Jonathan M. Metsch, Dr.P.H., is Clinical Professor, Preventive Medicine, Icahn School of Medicine at Mount Sinai; and Adjunct Professor, Baruch College ( C.U.N.Y.), Rutgers School of Public Health, and Rutgers School of Public Affairs and Administration.
This blog shares general information about understanding and navigating the health care system. For specific medical advice about your own problems, issues and options talk to your personal physician.