Impact of Payment Methods

Paper Summary:

This paper discusses the three types of payment options in the healthcare industry used by practicing physicians: fee for service, bundled service arrangements and capitation arrangement. This paper further examines the importance and benefit of each type of payment system in relation to several criteria, such as utilization rates and delineation of services."

From the Paper:

"The ebb and flow in the healthcare industry regarding payment systems and arrangements for practicing physicians has been especially pronounced in the last twenty years. With the constant rise in healthcare costs, the increased reliance on managed care systems and ever improving technology, the payment strategies used by physicians has become an important component of the business aspect of healthcare: "Insurance carriers are introducing an unending stream of new caps and conditions... Hospitals are undergoing a major restructuring... doctor groups are forming, breaking up, reforming and restructuring...to meet...demands of insurers..."(Galbick, 1996, par.1). This flux in the industry has only intensified which has had a pervasive impact on the healthcare industry in terms of payment strategies and systems. Physicians in managed care programs are often tasked to, either directly or indirectly, increase utilization rates of other services that the facility or program offers."

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