The unprecedented financial challenges hospitals face because of the COVID-19 pandemic shows how much hospitals rely on fee-for-service medicine, Vivian Lee, MD, PhD, president of health platforms at Verily Life Sciences and a senior lecturer at Harvard Medical School in Boston, wrote in an op-ed for STAT. It also highlights how hospitals are incentivized to bring patients back into the hospital whether it's necessary or not, she said.
As a financial model, fee-for-service medicine incentivizes billable services over healthy outcomes, Dr. Lee said, and begets massive administrative costs as health insurers and hospitals argue over coverage and requirements.
"There is a better way: Instead of funding medical groups by paying the bill after treatment, pay doctors and hospitals upfront to keep their patients healthy in the first place," she said.
Dr. Lee called this approach a subscription payment model. Miami-based ChenMed and Boston-based Iora use this model, as they charge a monthly fee for primary care. Three advantages come with a subscription payment model, Dr. Lee said:
1. Clinicians are incentivized to provide the best care by prioritizing preventive medicine
2. Administrative burden is reduced
3. Subscriptions act as a reliable source of funding when unpredictable crises like a pandemic occur
Ultimately, a subscription model limits "the incentive these groups may have, like any other business strapped for income, to be tempted to overcompensate for lost revenue with unnecessary care."
Read the full op-ed here.