Healthcare Initiatives

There is a growing agreement that many of the cost and quality problems in health care today are caused by the way we pay for healthcare services. Under most current healthcare payment systems physicians, hospitals, and other healthcare providers receive more revenue for delivering more services, a fee-for-service model. They do not gain more revenue for delivering higher quality services or services which are more effective in improving a patient's health, hence, providers are paid for doing more, not better. To achieve the quality improvement and cost reduction needed to ensure the long-term stability of the system and the success of the medical industry, healthcare systems need to transform the full spectrum of care delivery.

Currently, healthcare providers may actually be financially penalized for improving the quality of their services. For example, reducing errors and complications can not only reduce providers' revenues, but also reduce their profits and ability to remain financially viable. Since the doctors and hospitals get paid for the type, and volume of the care they deliver, this fee-for-service payment model creates a rift between providers and quality of care (Miller, 2011). If a physician tries to maintain a higher quality of care while sacrificing volume their profits and ability to remain financially viable are put at risk. This gives rise to abusive practices, such as physicians scheduling repeat visits to boost revenue, and prescribing unneeded tests and services in which the physician would benefit.

Since separate payments are made to each physician, hospital, and other healthcare providers involved in a patient's care, which can result in duplication of tests and services for the same patient2, there is no incentive for separate providers to coordinate their services. In order to have better coordination, bundled payments were used in which a single payment is made among all the providers for all services in a specific episode of care. Since all providers take part in collecting revenues, collaboration is essential in that it boosts overall quality of healthcare. Another technique that is now being utilized is Pay for Performance. In this payment system, the payment is tied to the physicians'' performance based on a defined set of quality measures. This model evaluates performance and pays for higher quality of care, however, this model emphasizes that providers focus only on areas that can be measured which measures the overall quality of care could suffer.