Fee-For-Service Thwarts Value-Based Care's Intention

Society wants the healthcare system to improve the population's overall health while caring for the sick at a lower overall cost. The term of art is providing value-based care. Yet system leaders are stuck with a reimbursement system that still rewards volume through fee-for-service medicine.

Those differing approaches to providing healthcare—actually, only value-based care can truly be called healthcare since fee-for-service medicine is more properly called sick care—present providers with two diametrically opposed incentive schemes.

Under fee-for-service, the more you do, the more you get paid. Dr. Atul Gawande, citing his own research, told attendees at this year's Healthcare Financial Management Association's Annual National Institute that margins at hospitals performing one complicated surgery rose from $17,000 to $56,000 after things went wrong. “The incentives are perverse,” he said.

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Source: Modern Healthcare