Healthcare Payment Models and Incentives

This assignment delves into the crucial topic of healthcare payment models, examining their impact on physician incentives. It analyzes various models like fee-for-service, capitation, and salary, highlighting their strengths and weaknesses. The discussion also touches upon 'supplier-induced demand' and how different payment structures can influence medical service utilization.

Remuneration of general
practitioners

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
a) Three alternative models for paying general practitioners .....................................................1
b) Remuneration system that is most likely to cause supplier induced demand (SID)...............2
c) Comparison of three remuneration systems............................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Remuneration can be referred to as the average gross annual income that is comprised of
social security contributions as well as income taxes which is being payable by the employee.
General practitioner is comprised of fully qualified general practitioners. The payment method
assist in making creation of stronger incentives for the doctors in order top locate their practice
within higher density areas (Armstrong and Murlis, 2007). The present investigation on
remuneration to general practitioners three alternative models for payment to general
practitioners have been included. Further it is comprised remuneration system that is most likely
to cause supplier induced demand.
a) Three alternative models for paying general practitioners
There is presence of three models that are being used by health care market for the sake
of making payment to general practitioner. This has been enumerated in the manner as below: Fee for service: In this kind of model the practitioners are being paid on basis of
particular amount in accordance with the service that is being offered. The system of
payment laid emphasis on the role of fees for service model as it offers the general
practitioners in increasing the scope towards gaining insight to carrying out the behaviour
synonymous with SID. This is being based upon the level of activity. The practitioners
are being paid a fee for each unit of the care which they delivers. This is in accordance
with fixed price schedule (Cumbi and et.al., 2007). Under this system the financial risk is
borne by the payer. As the payment is associated with the output thus particular system
incentivise the greater utilization of the services as well as increase in cost. The general
practitioners are incentivised for the sake of increasing the volume of their activities and
attracts greater number of patients, work for longer time and lay emphasis on payment of
fees for the services for increasing the income. Capitation: It is the type model in which practitioners are paid on certain per capital
amounts per enrolled patients on the basis of specific area. In similar words it is the kind
of contract the payment is based on per person. They are sometimes risk adjusted for the
sake of accounting the differences within the age as well as health distribution of the
population of patients across physicians (Dahrouge and et.al., 2012). Capitation has been
developed in order to incentivise the cost containment. Under this the scope as well as
gatekeeper role of the general practitioner becomes limited. In addition to this they can
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have incentive in order to make selection of the patient avoiding the one with higher
levels.
 Salary: Under this the practitioners are being paid the lump sum which is being defined
regardless the number or mix of services that is offered. It is the kind of system wherein
income of the physician is dependent on the number of periods performed. The general
practitioner is being paid fixed amount of money for a particular amount of hours for
which the work has been done.
b) Remuneration system that is most likely to cause supplier induced demand (SID)
Fee for service is regarded as the remuneration system that is most likely to cause
supplier induced demand. Supplier induced demand can take place while the asymmetry of the
data is present between the consumer as well as supplier. The supplier can make utilization of the
data for the sake of promoting the person to demand a huge quantity of the good and services
they supply in comparison with Pareto efficient level where asymmetric information does not
exist. The result of such relates with the welfare loss. SID can enhance expenditure of healthcare,
bring enhancement in the financial pressures on the public health insurance programs and
improve the share of national resources which are being spent over healthcare (Fujisawa and
Lafortune, 2008). SID is being proposed as one of the possible reasons for wider variations
within the costs of medical care. Supplier induced demand takes place when the general
practitioner make use of superior knowledge for the sake of increase the demand of medical
services for the patients beyond such is recommended as it is deemed by the fully informed
patients. There is existence of supplier induced demand and this has greater impact on the health
care use as well as variation within the prices then health policy constraints has to be focused
upon the supply side for sake of controlling the behaviour of practitioner. One of the defining
feature associated with the healthcare market is larger knowledge gap among the doctor and
patient. Because of such asymmetry of the knowledge as well as higher cost as well as difficulty
in gaining fuller knowledge, patients are dependent on doctors for advising the suitable amount
as well as kind of services which is required for the sake of improving their health.
c) Comparison of three remuneration systems
The three remuneration system includes fee for service, capitation system as well as
blended capitation payment schemes. It has been assessed that fee for service is one that is
activity based and under this payment of the fees is done for each unit of the care that is being
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delivered (Houle and et.al., 2012). In contrast to this capitation system is on a per person basis.
Under this the general practitioner are being paid fixed, upfront rate per person who is enrolled
within the list apart from the type as well as amount of services which is being utilized. On the
contrary salary system is the income of the practitioner which is dependent over the number of
periods work has been performed.
It has been determined that mostly blended payment system is being found. Pure payment
method such as three major ones are combined into more complex method of payment which
purport to possess more desirable mix of incentives and avoids certain adverse incentive of
simple payment method (GP payment schemes review, 2014). This model is is comprised of
partial capitation that is combining fees for service payment for the subset of the services along
with the capitation for the services that are lesser amenable to production of piece rate. In
addition to this it is comprised of mixed models which blends elements of capitation payment,
pay for performance incentives as well as fee for service. This is comprised of the bundled
payments that makes payment to the accountable provider form a fixed amount for greater
number of services that are needed for treating episode of care. This method is considered
sophisticated as it assist in making fair payment to the general practitioner. Further the complex
method of payment can result in creating own set of perverting activities.
CONCLUSION
It can be concluded from the present study that method of payment that is remuneration is
considered important as it assist in making creation of stronger incentives for the doctors in
order top locate their practice within higher density areas. Along with this it has been inferred
that there is presence of three method of payment. This is comprised of fee for service, capitation
as well as salary. All the three differs from one another to a greater extent. Along with this
Supplier induced demand takes place when the general practitioner make use of superior
knowledge for the sake of increase the demand of medical services for the patients beyond such
is recommended as it is deemed by the fully informed patients.
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REFERENCES
Journals and Books
Armstrong, M. and Murlis, H., 2007. Reward management: A handbook of remuneration
strategy and practice. Kogan Page Publishers.
Cumbi, A. and et.al., 2007. Major surgery delegation to mid-level health practitioners in
Mozambique: health professionals' perceptions. Human Resources for Health. 5(1). pp.27.
Dahrouge, S. and et.al., 2012. Impact of remuneration and organizational factors on completing
preventive manoeuvres in primary care practices. Canadian Medical Association Journal.
184(2). pp.E135-E143.
Fujisawa, R. and Lafortune, G., 2008. The remuneration of general practitioners and specialists
in 14 OECD countries.
Houle, S.K. and et.al., 2012. Does performance-based remuneration for individual health care
practitioners affect patient care?: a systematic review. Annals of Internal Medicine. 157(12).
pp.889-899.
Online
GP payment schemes review. 2014. [Online]. Available through:
<https://www.kent.ac.uk/chss/docs/GP-payment-schemes-review-Final.pdf>. [Accessed on 9th
June 2017].
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