How do we pay for health care? How does it change what doctors do? Why do we care? These, among many other questions that have never spontaneously entered your mind while staring in a mirror, vex me; How money flows, in my humble opinion, shapes most (if not all) aspects of health care.
Changing the architecture of reimbursement to health care providers has been a constant theme of increasing importance over the past 30 years. I am currently reading a book "Innovators Prescription" that described fee-for-service (FFS) payment as a runaway nuclear reactor in our health care system - I did a fist pump as a read this. I cannot guarantee you will descend to my level of nerdy wonkishness but I can say, with confidence, that you will understand the power of that statement by the end of the post.
FFS is a style of payment in which a provider is reimbursed per action or procedure. For example, if you see a doctor for a cold, she will make more money if she does a strep test, takes a chest x-ray, and prescribes antibiotics than if she just told you it was viral (which it likely is), that medication wouldn't make it better (which it won't), and sent you home with instructions to rest and drink hot tea.
A physician that gets paid per "thing" has a strong financial incentive to do more "things". What are the pros and cons? The upside is patients are more likely to get too much medicine than not enough medicine. The other upside - for physicians - is that FFS is an extremely profitable way to bill for medical care.
The downside? Too much medical care can be harmful, actually very harmful, and routine excessive care drives up medical costs globally. Higher costs of care eventually lead to higher insurance premiums for you and me. Some estimate that 50% of all health care spending is supply driven by physician and hosptials rather than the needs of patients.
FFS was the style of payment used in the early 20th century when medicine was simple and relatively cheap. Physicians, concerned with preserving autonomy and reimbursement levels, have historically advocated to maintain FFS. This, until recently, has worked out pretty well for doctors.
Times have changed however, one person is no longer treated by one doctor - the average patient has 2 primary care providers and 3 specialists. What happens now when each member of the "team" only gets paid per thing and we have a plethora of expensive tests at our disposal? Everyone does tons of stuff and efficiency goes out the window.
Let's take it further. Let's say we want physicians to collaborate, and make care more cost-effective. Collaboration requires money up front to invest in technology and administrative infrastructure. What happens if it works? People will be healthier and visit the doctor less. The doctor makes less money. Essentially, with FFS reimbursement, a doctor working on coordinating care needs to pay money up front with the hope of eventually make less money.
What can we expect out of a health care system if doctors only stand to make money when patients are sick? With FFS ill patients are profitable patients. The more sick a patient is, the more tests can be run, and the more money a provider makes. Shouldn't physicians make money by keeping people healthy?
The truth is that money does matter in medicine. We must be aware of how it moves because it shapes even the most intimate diad of medicine: the physician patient interaction. Coming up is a discussion of capitation: its promise, how we learned to hate it, and why we could learn to love again.
Enjoy, be informed, and above all, cultivate an intelligence intimidating to your peers...
Changing the architecture of reimbursement to health care providers has been a constant theme of increasing importance over the past 30 years. I am currently reading a book "Innovators Prescription" that described fee-for-service (FFS) payment as a runaway nuclear reactor in our health care system - I did a fist pump as a read this. I cannot guarantee you will descend to my level of nerdy wonkishness but I can say, with confidence, that you will understand the power of that statement by the end of the post.
FFS is a style of payment in which a provider is reimbursed per action or procedure. For example, if you see a doctor for a cold, she will make more money if she does a strep test, takes a chest x-ray, and prescribes antibiotics than if she just told you it was viral (which it likely is), that medication wouldn't make it better (which it won't), and sent you home with instructions to rest and drink hot tea.
A physician that gets paid per "thing" has a strong financial incentive to do more "things". What are the pros and cons? The upside is patients are more likely to get too much medicine than not enough medicine. The other upside - for physicians - is that FFS is an extremely profitable way to bill for medical care.
The downside? Too much medical care can be harmful, actually very harmful, and routine excessive care drives up medical costs globally. Higher costs of care eventually lead to higher insurance premiums for you and me. Some estimate that 50% of all health care spending is supply driven by physician and hosptials rather than the needs of patients.
FFS was the style of payment used in the early 20th century when medicine was simple and relatively cheap. Physicians, concerned with preserving autonomy and reimbursement levels, have historically advocated to maintain FFS. This, until recently, has worked out pretty well for doctors.
Times have changed however, one person is no longer treated by one doctor - the average patient has 2 primary care providers and 3 specialists. What happens now when each member of the "team" only gets paid per thing and we have a plethora of expensive tests at our disposal? Everyone does tons of stuff and efficiency goes out the window.
Let's take it further. Let's say we want physicians to collaborate, and make care more cost-effective. Collaboration requires money up front to invest in technology and administrative infrastructure. What happens if it works? People will be healthier and visit the doctor less. The doctor makes less money. Essentially, with FFS reimbursement, a doctor working on coordinating care needs to pay money up front with the hope of eventually make less money.
What can we expect out of a health care system if doctors only stand to make money when patients are sick? With FFS ill patients are profitable patients. The more sick a patient is, the more tests can be run, and the more money a provider makes. Shouldn't physicians make money by keeping people healthy?
The truth is that money does matter in medicine. We must be aware of how it moves because it shapes even the most intimate diad of medicine: the physician patient interaction. Coming up is a discussion of capitation: its promise, how we learned to hate it, and why we could learn to love again.
Enjoy, be informed, and above all, cultivate an intelligence intimidating to your peers...
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