Healthcare: an economic paradox.
On one hand, it is our nation’s fastest-growing employer, projected to add 15.6 million jobs by 2022.On the other hand, high costs coupled with an aging population are breaking budgets. The root of healthcare’s cost dilemma is the fee-for-service system, which pays providers based on the number of office visits, tests or procedures they perform. Because payment is tied to consumption, fee-for-service directly contributes to our spending problem.
Fee-for-service also creates fragmentation, with providers incented to “compete” with one another, rather than work together for better outcomes. Because providers are rewarded this way, they lack a strong motivation to steer people toward the highest-quality, most cost-effective care, or to ensure patients are monitored across sites in a coordinated fashion—realities that contribute to inefficiency, as well as patient frustration.
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Modern Healthcare: By Susan DeVore | August 15, 2015