The level and means by which providers of healthcare are paid has a substantial effect on access, costs, and the quality of care. In countries that rely on a private healthcare delivery system (the United States, Canada, France, and Belgium) the predominant mode of payment for physicians who provide ambulatory care is fee-for-service. In most instances physicians bargain with insurers or the government over a fee schedule. In some countries there is a provision that physicians can charge patients more than the allowed fees in certain circumstances. There is concern that the financial incentives inherent in a fee-for-service system result in over utilization of services, especially those reimbursed at higher levels relative to other services. However, the autonomy of providers is preserved, and there is an incentive for increased productivity. Additionally, there is no conflict between the financial interests of providers and their duty to provide all services that are of benefit to patients. Cost- or charge-based reimbursement for institutions (hospitals, nursing homes, etc.) has similar risks and benefits.
Some insurers in the United States and the Netherlands use capitation (a set payment per person per year) or a set payment per case to pay providers. Capitation payments provide an incentive for healthcare workers and facilities to limit the volume of provided services and allow providers to determine precisely which services to provide. At the same time, case-based payment and capitation create a conflict between the financial incentive of the provider and the interest of the individual patient in receiving all services that are of possible benefit. This can be a problem for people with multiple chronic conditions, who are often the most expensive to treat.
In many countries, hospitals are paid on prospectively negotiated global budgets and hospital-based providers, including physicians, are paid on a salaried basis. These methods of payment have little apparent effect on the provision of services to individuals. However, the level of payment may have a profound effect on which technology is acquired and on whether providers expend the time and effort required to provide a given service in general.
Was this article helpful?