What it takes for true payment reform in healthcare

While the healthcare industry aims to shift away from a fee-for-service payment model that rewards volume over value, real payment reform must retain some elements of fee for service, such as the accounting system that helps payers divide risk-adjusted capitation payments, according to a health policy expert.

"If you abolished all fee-for-service tomorrow, you abolished all those codes, you'd have no clue what's going on out there," Len Nichols, Ph.D., said Tuesday during the closing keynote address at the Patient-Centered Primary Care Collaborative Fall Conference, MedPage Today reported.

The problem is getting all the industry players, including hospitals, physicians and insurers, on the same page about payment reform, said Nichols, director of the Center for Health Policy Research and Ethics at George Mason University in Fairfax, Va.

He proposed a model in which providers would still compete on costs, patient experience and quality, and private health plans would share more savings with providers instead of partial capitation.

With goals to create a low-cost, high-quality healthcare system, a new study suggests hospitals in India could send "a wake-up call" to U.S. facilities. India's private hospitals use innovative ways to manage costs, personnel and equipment to provide affordable world-class care at a fraction of U.S. costs, according to the Harvard Business Review

To do so, these hospitals established a hub-and-spoke approach to assets, rethought who should do what and focused on cost-effectiveness. For example, they concentrate specialists and sophisticated equipment at urban hubs. Spoke facilities surround the hubs and focus on diagnosis, routine treatment and follow-up care and send patients to the hubs for complex procedures and surgery, the article noted.

The hospitals also took an innovative approach to task-shifting, creating new types of low-cost healthcare workers and highly focused specialists. They also relied on self-service in which patients and family members take over some tasks from hospital staff.

For more:
- read the MedPage article
- here's the HBR article (.pdf)