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Physicians in the United States of America are compensated in three ways. Salary, fee for service, and set payment shames are examples of these (Frist, et al., 2013). In America, the most common method of reimbursement is fee for service. This strategy allows patients to visit the doctor of their choice. Patients will pay the doctor based on the services they receive (Schroeder & Frist, 2013). This system enables for specialist referrals and gives the payer with appropriate information on what they buy, allowing for improved auditing. Although prevalent, fee-for-service models have numerous drawbacks. The most obvious disadvantage of this system is its provision for physicians to increase the volume of the service offering. For those physicians whose service offering includes management and evaluation, the only way they can increase the volume of offered service is to schedule several appointments that must be shorter.
Fixed payment schemes pay physicians a set amount mainly through bundling or capitation. Capitation pays physicians a fixed amount. This amount is normally based on the number of patients served and is paid monthly. Capitation holds the advantage of focusing on prevention and primary care. It also allows services to be delivered in the most effective setting. This system, however, restricts the patients on physician choice. It further restricts referrals among other downstream services. Bundling, on the other hand, pays a fixed amount of a specific service or health event. The physicians are thus more economically prudent. Bundling, however, presents many practical problems like dividing the pay among participating physicians in one event.
The last payment option is salaries. Salaried payments are fairly common. This scheme encourages over-referrals as the physicians get no reward for management of complex patients. The incentives for improving quality of service for salaried physicians are few. Other institutions have come up with bonuses earned for meeting certain targets.
The healthcare system requires reforms, especially in physician payment. According to National Commission, twelve recommendations may help improve physician payment and the healthcare system as a whole. The first recommendation made by the commission is that to end the inherent inefficiencies of fee for service scheme of payment; this method should be eliminated over time. According to Frist et al. (2013), this system is responsible for the soaring cost of healthcare as providers are likely to increase volume even when not justified. This is a true argument. Health economic predicts that this payment method leads to exploitation of patients through increase of supply by the doctors. Through doubling, physicians create a supply-induced demand that increases the cost of healthcare. This system should thus be done away with to encourage equity in healthcare.
The fifth recommendation made by the Commission aims at eliminating higher payments for health care services that can be offered for less cost but similar quality elsewhere. This recommendation then advocates for transparency in physician payment mechanisms. The disparity in healthcare payment exists in services offered in outpatient vs. hospitalized setting. According to a report by Frist et al. (2013), patients pay about 80% more for a service offered in a physician's office when it is offered in an inpatient setting. Private practice also encourages high pricing for services that can be offered elsewhere at low charges. This is a feasible recommendation. If the private sector can be regulated and services prices fairly equally throughout healthcare facilities, this problem can be avoided. Additionally, introduction of billing systems like fee splitting and systems that allow self-referrals and encourages diagnosis related groups are likely to end this disparity. Additionally, the government can act to regulate the private sector. Government intervention can also come in through correction of externalities and the operation of more state-owned enterprises (Schroeder & Frist, 2013).
The ninth recommendation as given by the National Commission on Physician Payment Reform states that measures ought to be put up to maintain access to high-quality health care while at the same time ensuring strong physician commitment to their patients (Frist et al., 2013). The Commission recognizes that for acceptable standards of health care provision, the physician should accord the patient the highest level of commitment possible. Physician commitment to patient is best fostered through a well rewarding payment system and motivating incentives. On the other hand, the physician's financial options cannot be put above the patient's quality of care. It, therefore, remains important that to reduce health care cost, there has to optimal service delivery and a well rewarding payment scheme. The problem that often arises in the bid to reduce healthcare cost is the denial of evidence-based care to patients while trying to save on cost. The government in partnership with health facility management should ensure quality measures that accord patients the best care while trying to remain economically oriented.
Frist, W., Schroeder, S., Bigby, J., Brennan, T., Delbanco, S., & Gallagher, T. (2013). Report of the national commission on physician payment reform. National Commission on Physician Payment Reform, Washington, DC (March 2013).
Schroeder, S. A., & Frist, W. (2013). Phasing out fee-for-service payment.
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