Comparing Fee-for-Service and Capitation Models- Profit Analysis and Alignment with Healthcare Reform Goals

Comparing Fee-for-Service and Capitation Models- Profit Analysis and Alignment with Healthcare Reform Goals

Capitation and fee-for-service are different payment methods used when paying healthcare providers. In capitation, doctors are paid a predetermined fee for every patient they treat. On the other hand, fee-for-service (FFS) involves paying doctors based on the nature and number of procedures they offer since medical procedures vary in complexity (Glazier et al., 2009). Both capitation and FFS are widespread across the US, but the latter’s use has declined significantly over the past decade.

The differences between the two models are the source of a debate on healthcare reforms in the US. There has been a reluctance to adopt the capitation system due to a lack of suitable structures that reward both the insurance company and healthcare providers. However, the capitation system has more potential to improve primary healthcare compared to the FFS system. Do you need help with your assignment ? Get in touch with us at eminencepapers.com.

A significant weakness of the FFS system is that it is volume-based, thus cumbersome to both the patient and service provider. Since payments are based on the number of services provided to the patient, healthcare providers encounter an uncertain financial future (Glazier et al., 2009). Thus, they are sometimes forced to conduct unnecessary health procedures to boost their income. Besides, there are variations on projected profits since some patients require extensive procedures, while others only need very few procedures.

However, for capitation, healthcare providers receive a constant monthly reimbursement for the care provided. Providers are reimbursed whether patients receive care within the set time frame, regardless of the cost of the procedure (James et al., 2016). Another advantage of this model is that it ensures quality care by incentivizing physicians. Additionally, capitation helps to control the cost of healthcare by eliminating the likelihood of unnecessary procedures (James et al., 2016). By paying providers based on the quality of care offered, providers are incentivized to give sufficient care to enhance the quality of patients’ lives and keep them enrolled.

References

Glazier, R. H., Klein-Geltink, J., Kopp, A., & Sibley, L. M. (2009). Capitation and enhanced fee-for-service models for primary care reform: a population-based evaluation. Cmaj, 180(11), E72-E81.

James, B. C., Poulsen, G. P., & MD. (2016, November 7). The Case for Capitation. Harvard Business Review. https://hbr.org/2016/07/the-case-for-capitation

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Based on your readings this week, discuss the differences between a fee-for-service model and that of a capitated environment. Be sure to include specifics related to the profit analysis of each model. Be sure to also discuss which model most closely reflects the goals related to health care reform, and why.

Comparing Fee-for-Service and Capitation Models- Profit Analysis and Alignment with Healthcare Reform Goals

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