How Primary Care Financing Reform Can Drive Successful Healthcare Reform

March 29, 2010 11:39 EDT
by Jordan Bazinsky

The rising cost of healthcare in the United States has sparked a national debate, pitting politicians against one another while millions of Americans and small to mid-sized employers are struggling to pay for coverage. Successful healthcare reform that truly benefits payors, providers, and patients alike requires a focus on preventive medicine and a financial model that rewards and incentivizes clinical value versus utilization.

Few would argue that better-quality care offered at lower costs would improve the national well-being. But people respond to incentives, which are so misaligned in the current healthcare system that success is elusive. The key to successful reform is to align financial incentives such that doctors and payors, as well as patients and their employers, share in the rewards of meeting a triple mandate:

• Improved clinical outcomes
• Better patient experiences
• Lower costs

Doctors’ Compensation

As part of a primary care financing reform, doctors should receive a sizeable part of their compensation via a partially capitated comprehensive payment, guaranteeing financial rewards for expected services. In this scenario, the capitated bundled payment would require risk adjustment, which takes into account the sicker patients within a doctor’s population and eliminates the incentive to select only the healthiest patients.

To further promote clinical value, physicians should also receive meaningful compensation in the form of outcomes payment, ensuring that doctors are rewarded for achieving good clinical results across their entire patient population.

Improving our healthcare system requires a shift towards a financing model where physicians are paid for providing the right care, at the right time, and for the right price. More importantly, both the provider and payor should assume the proper levels of clinical and financial risk.

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Author: Jordan Bazinsky, vice president of science and technology at Verisk Health