Reimbursement Methods in Healthcare: Advantages and Disadvantages | Desklib

This assignment discusses the different reimbursement methods in healthcare, including bundled payments, fee for service, value-based reimbursement, shared savings, and discount on billed charges. It explores the advantages and disadvantages of each method and identifies the best method for healthcare. The impact of reimbursement on healthcare facilities is also discussed. Document Type: Assignment. Subject: Healthcare. Course Code: N/A. Course Name: N/A. College/University: N/A.

Running head: HEALTHCARE ASSIGNMENT
REIMBURSEMENT METHOD IN HEALTHCARE
Name of the Student
Name of the University
Author note

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Introduction
Reimbursement method in healthcare is the process through which organizations and
institutes provide or reimburse their employees with benefit so that they can compensated for the
medical expenses (Diaby & Goeree, 2014). This is a method of providing employees with
monetary or service related reimbursements so that their important and reasonable expenses
could be compensated by the organization (Kaplan et al., 2014). On the other hand,
reimbursement also helps people in the form of healthcare insurances where the policy holder’s
healthcare expenses is directly paid by the organization providing the policy (Weernink et al.,
2014). In healthcare services, professionals such as nursing professionals and physicians are also
provided with reimbursement for their healthcare expenses by the insurance companies or the
government. However, the private insurance companies provide reimbursement as per their own
negotiations, the public insurance organizations provide the compensation depending on the rank
of the professional (Porter & Kaplan, 2014).
In the Middle-east region, majority of the countries have complete control over their
healthcare system (Al-Hanawi et al., 2018). Further, due to the free of charge nature of the
service, the governments face tremendous pressure in managing the healthcare costs of the
complete community (Al-Hanawi et al., 2018). In Saudi Arabia, Council for Corporative health
insurance was developed so that the reimbursement related to insurance could be managed by the
public healthcare department. This comprehensive healthcare coverage allowed the population of
the country to compensate for their healthcare needs through governmental funding or the
national health insurance schemes (Al-Hanawi et al., 2018).

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This section is intended to discuss about the reimbursement methods of the healthcare
system and then will discuss about the reimbursement methods such as bundled payments, fee
for service, value based reimbursement, shared savings and discount provided on billed charges.
Through these methods the reimbursement process within the country would be explained and
then the advantages and disadvantages of the process will be provides so that the best method of
reimbursement for the healthcare process could be identified.
Five methods of reimbursement provided in healthcare process
Reimbursement method in healthcare processes are of five types and each of them have
different extent of support that is provided to the healthcare professionals in Saudi Arabia. These
methods are:
 Bundled method
 Fee for service (within which Cost-based Reimbursement/Charge-based
Reimbursement and Prospective Payments is present)
 Discount on billed amount
 Value based reimbursement and
 Shared savings (Weernink et al., 2014)
Bundled payment methods are group of multiple services which are provides to the
healthcare service users or healthcare professionals working in any organization to cover their
multiple ailments or healthcare concerns with one policy or system (Diaby & Goeree, 2014).
Therefore, through this service, unnecessary services could be eliminated and depending on the
need of the services, customers are able to choose the required healthcare services (Kaplan et al.,
2014).

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On the other hand, fee for service is the reimbursement method where the service users
pays for services separately and hence, healthcare facilities are able to put extra cost in the care
process (Thiels et al., 2015). This is because this provisions provide them with the authority to
put extra charges for the quantity of care and hence this reimbursement methods provides benefit
to the healthcare facility, rather than the service users in Saudi Arabia (Porter & Kaplan, 2014).
Within this payment method, three categories are present such as Cost-based Reimbursement
or Charge-based Reimbursement and Prospective Payments. In these, cost based payment
allows the payer (public or private) to pay the amount which has been used to provide care to the
patient. Whereas, the prospective payment method is based on a fixed amount determined by
the payer both government and private for a specific category of ailment and patients covered
with such reimbursement could only use this method of payment if they are diagnosed with those
disorders. Besides these there is a reimbursement method namely the Capitation payment
method, this is a different payment method that is connected to a covered person, regardless of
the services received by them. Thus, if a patient is provided with check-ups, MRI, or other care
method, only a set amount would be paid, not each service provided.
Shared savings is the reimbursement process in which the healthcare facilities are
provided with incentives upon providing cost effective and quality treatment to a specific
community. There are several communities in Saudi Arabia, who are economically backward
and dependent on the free healthcare services provided by the government (Popesko, Papadaki &
Novák, 2015). Hence, providing them with quality care within a specific health cost requires
extra effort and hence, the government or the private reimbursement organization provides a
specific amount to the healthcare facility and the professional for providing the patient an
effective care treatment (Drummond et al., 2014). On the other hand, depending on the values of

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the healthcare processes followed in the care delivery, the reimbursement amount is decided and
provided to the healthcare facility. Therefore, in these payment method, depending on the
patient’s health outcomes, the amount or the reimbursement is provided (Thiels et al., 2015).
Advantage and disadvantages of these reimbursement methods
While determining the advantages and disadvantages of the reimbursement methods, the
paradigm shift present in the healthcare method and its applications should be mentioned (Saleh
& Shaffer, 2014). The current healthcare service is benefitted by the government as majority of
the costs of the healthcare devices, treatment procedures and the pharmaceutical supports are
provided by the government under several reimbursement policies (Diaby & Goeree, 2014).
Therefore, the payment methods of the reimbursement techniques, depends on the government
policies and then depending upon the Claus generated by the private organization, provides help
to the service user (Saleh & Shaffer, 2014). Besides that, the advantage or disadvantage of the
reimbursement method depends on the healthcare process or the service utilized by the patients.
Hence, prior to categorizing any process depending on their advantages and disadvantages, these
factors should be kept in mind (Goldstein & Sarfaty, 2016).
As shared savings method focuses on the community that are economically backward or
are unable to pay for their healthcare expenses, it is advantageous for the service users as well as
to the healthcare providers because they receive incentives on successful treatment of such
patient. Hence, it acts as an alternative source of revenue generation for the healthcare providers
(Al-Hanawi et al., 2018). Further, they are also provided with healthcare equipment by the
government so that they can improve their quality of healthcare process (Saleh & Shaffer, 2014).
Hence, this method is advantageous for the primary healthcare physicians. However, while

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providing quality care using cost-effective interventions or equipment puts excess pressure on
the healthcare professionals and hence it is a disadvantage for the healthcare facility as the
physicians start facing burnout. Besides that, these method of reimbursement without accessing
the strain present in the healthcare process, assesses the quality provided in the care process and
hence, healthcare staff shortage could be faced by the facility.
On the other hand, discount on billed amount and value of care payment methods or
reimbursement methods focuses on the value of care and depending on the patient’s outcome
provides the healthcare facility with monetary or asset related support (Goldstein & Sarfaty,
2016)(. The primary advantage of these methods are that patients are able to receive quality
healthcare and at the end of their treatment, their health condition is improved. Further as per
Saleh and Shaffer (2014), due to these processes the healthcare professionals are nowadays
focused in the quality of the care process, rather than on the number of patients visiting their care
facility. However, due to the complete focus on the value of the care process, they became
unable to retool their process and hence they lack specific target for the improvement of the
process (Al-Hanawi et al., 2018).
The bundled payment method, depends on the healthcare package taken by the care
service users and hence, the care intensity and the interventions completely depend on the type of
care process taken by the patient (Al-Hanawi et al., 2018). Therefore, advantage of the
reimbursement process depend on the chosen coverage plan and depending on the process, the
healthcare professionals provide the patients with interventions (Goldstein & Sarfaty, 2016).
However, due to the process of the reimbursement method, patients suffering from chronic
illness, could not receive the effective care and it affects their health. Besides, majority of the

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illness are not covered under this reimbursement method affecting the care process for majority
of the healthcare service users in the country (Saleh & Shaffer, 2014).
The best method of reimbursement for healthcare
The best method of healthcare reimbursement should be inclusive of benefits for the
healthcare professionals, healthcare service users as well as the healthcare facility so that each of
the stakeholders should be provided with proper benefits depending upon their needs (Al-
Saggabi, 2017). As per Henkel and Maryland (2016), the value based reimbursement is the best
process of reimbursement as it focuses in the favour of the care process and do not focus on
either healthcare professional or the patients. Due to this, the primary aim of the healthcare
process that is reinforcing quality and safety within the care process is achieved and both the
stakeholders are provided with their share of benefits at the end of the care process. Another
research de Souza et al. (2014) mentioned that value based healthcare reimbursement is the best
among all the methods because it makes the care process effective for the patient and through the
process the skill of the healthcare professional also got improved. As majority of healthcare
professionals are losing on their skills and practices due to the commercialization of the process,
value based reimbursement helps them to find their routes within quality and safety of the
patients (Bah et al., 2015). Further, Weernink et al. (2014) also mentioned that this method
provides the healthcare professionals with proper incentives after their successful treatment
application on patients. Therefore, this method of reimbursement should be used throughout the
country to provide the patients with provisions of quality and safe care process and compensate
their burden with governmental or private insurance reimbursements (Saleh & Shaffer, 2016).

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Impact of reimbursement on healthcare facilities
In this new age of the healthcare services, people are looking for cost effective and
quality healthcare interventions so that through the care process, service users could utilize the
process and compensate their healthcare related costs with reimbursement methods (Gapenski &
Reiter, 2015). These reimbursement methods thereby helps to connect the service users to that of
the care providers through out-of-pocket compensations and hence, the direct impact of the
reimbursement method should be analyzed through the positive feedback collected from that of
the healthcare service users (Howard, 2014). However the service is under the contract signed by
the private insurance company or the government and hence, the benefits or loss of the
healthcare facility is determined by the reimbursement technique (Weernink et al., 2014).
However, due to the process of reimbursement, it has become important for both the healthcare
facility and the insurance organizations to focus on the quality as well as the quality so that both
quality and monetary benefits could be imparted in the care process. hence, such insurance
policies and strategies has become an important part of the revenue generated by the healthcare
facilities around the world and the healthcare facilities has also understood the importance of
such policies for their expansion (Berenson et al., 2016).
Conclusion
Reimbursement in healthcare is payment methods through which compensations for
payments of healthcare expenses are provided to the healthcare service users of professionals as
they are covered with public or private healthcare insurances. With increased advancement of the
healthcare means. Kingdom of Saudi Arabia also implementing reimbursement methods so that
the pressure of healthcare related expanses could be shared by private insurance organizations or
the healthcare service users in the country. Majority of the imbursement methods are depending

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on the value based payment method where after obtaining improved health, healthcare
organizations and professionals are provided with payments. This assignment involves detailed
description of all these reimbursements methods and provides an idea about the widely available
reimbursement method that impacts the healthcare system positively.

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