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For rare conditions and the very sick, there are a lot of thorny issues, and fee-for-outcome may be hard to implement well. However, those don’t represent the

For rare conditions and the very sick, there are a lot of thorny issues, and fee-for-outcome may be hard to implement well. However, those don’t represent the bulk of medical procedures; the vast majority of what’s done in a hospital is utterly routine and predictable, and the outcomes are most definitely quantifiable.

jdmichal 13y ago
But, in those routine cases, fee-per-service-rendered is pretty much exactly the same as fee-per-outcome, no? I mean, barring malpractice, which already has its own (litigious) path of remediation.
- stephencanon 13y ago
  It brings the financial incentives inline with what everyone says the goal is. Fee-for-service incentivizes volume, even if it comes with the consequence of worse outcomes; we simply depend on doctor’s morals to not push it too far, with malpractice and licensing handling truly outrageous abuses. Fee-for-outcome explicitly incentivizes better quality control in a much more fine-grained manner. More on point, fee-for-service incentivizes unnecessary and expensive diagnostic tests. Let’s say a patient presents with an uncomplicated broken arm. If there’s a set payment for an outcome (successful treatment of the break, with fully restored function), and diagnostic and treatments costs come out of that fee, the incentive is to order as many x-rays as are necessary to successfully treat the injury and no more. In fee-for-service, the orthopedist has no incentive not to order superfluous imaging because it doesn’t cost her anything, and may have incentive to order extra imaging (if, say, she also owns the imaging center that bills for it). Medicine is littered with examples where there are two tests whose diagnostic power is statistically equivalent, and yet doctors common write for the more expensive test. Fee-for-service is either a neutral or perverse incentive in these cases. Fee-for-outcome aligns the incentive with what society seems to want (lower-cost healthcare with good outcomes).
  - jdmichal 13y ago
    I fail to see how fee-for-outcome helps any of this. They would still be free to order the more expensive test, and it would even encourage more testing. If they run the wrong test and miss the diagnosis, then they don't get paid at all...
    - stephencanon 13y ago
      The doctor/hospital gets a flat fee for the outcome regardless of how they achieve it. Unnecessary procedures and tests come out of their bottom line.

jdmichal 13y ago

But, in those routine cases, fee-per-service-rendered is pretty much exactly the same as fee-per-outcome, no? I mean, barring malpractice, which already has its own (litigious) path of remediation.

stephencanon 13y ago
It brings the financial incentives inline with what everyone says the goal is. Fee-for-service incentivizes volume, even if it comes with the consequence of worse outcomes; we simply depend on doctor’s morals to not push it too far, with malpractice and licensing handling truly outrageous abuses. Fee-for-outcome explicitly incentivizes better quality control in a much more fine-grained manner. More on point, fee-for-service incentivizes unnecessary and expensive diagnostic tests. Let’s say a patient presents with an uncomplicated broken arm. If there’s a set payment for an outcome (successful treatment of the break, with fully restored function), and diagnostic and treatments costs come out of that fee, the incentive is to order as many x-rays as are necessary to successfully treat the injury and no more. In fee-for-service, the orthopedist has no incentive not to order superfluous imaging because it doesn’t cost her anything, and may have incentive to order extra imaging (if, say, she also owns the imaging center that bills for it). Medicine is littered with examples where there are two tests whose diagnostic power is statistically equivalent, and yet doctors common write for the more expensive test. Fee-for-service is either a neutral or perverse incentive in these cases. Fee-for-outcome aligns the incentive with what society seems to want (lower-cost healthcare with good outcomes).
- jdmichal 13y ago
  I fail to see how fee-for-outcome helps any of this. They would still be free to order the more expensive test, and it would even encourage more testing. If they run the wrong test and miss the diagnosis, then they don't get paid at all...
  - stephencanon 13y ago
    The doctor/hospital gets a flat fee for the outcome regardless of how they achieve it. Unnecessary procedures and tests come out of their bottom line.