Guest post by Saqib Ayaz, co-founder, Workflow Management & Optimization.
Regardless of whatever business you operate, the end goal is always customer satisfaction and healthcare is no different. Since healthcare is particularly valuable, it makes sense that the financial reward given to a valuable service should be high and based on a value model.
However, value-based models in healthcare do not have the same outcomes as they do in other businesses.
Value-based payments have their advantages and disadvantages. For instance, on the one hand, value-based systems effectively liberate physicians from the constraints of fee for service so that they can concentrate on the overall health of their patients. Alternatively, some people say that value-based payment systems impose unneeded extra pressure on providers without necessarily getting the job done.
What is value-based payment in medicine?
Value-based systems reward physicians and healthcare providers with incentive payments for the quality of care given to patients with Medicare. These payment systems are part of a strategy to improve how healthcare is delivered and paid for. The purpose of any value-based system is to:
- Improve how patients are given care in hospitals
- Improve the overall health of the population
- Lower the overall cost of healthcare
Effectively, value-based systems move toward paying doctors and healthcare providers based on the quality of care rather than the quantity of care given. Instead of charging patients based on the number of visits and tests that they order (fee for service payments), today, more hospitals are charging based on the value of the care that they give.
Fee for service payments
Traditionally, healthcare providers are refunded by third-party payers like insurance firms or by the government through Medicare or Medicaid. The amount of money that is paid is set at a going rate that is typically established by the agencies themselves. Since the budgeting of the costs and expenses are based on third party consumers, the system is marred by administrative hiccups, which has led to runaway care costs at the expense of the quality of care given and the patient.
The difference between fee for service and value-based payments lies in reimbursements and the quality of care provided.