Problems With a Fee-for-Service Model for Healthcare

In the world of healthcare, there are two main payment systems you can use: value-based care and fee-for-service. While value-based care focuses more on patient outcomes, fee-for-service is a model that’s designed to pay medical professionals based on which services have been provided. While this model has existed for a long time, there are reasons to believe it might not be the best model for your medical practice. Here are reasons your medical facility may want to avoid using a fee-for-service payment model.

It Negatively Affects Patient Care

A fee-for-service payment model is totally backwards when it comes to providing quality patient care. While value-based care models encourage medical professionals to provide the best care for patients, that’s not the case with fee-for-service models. Instead, medical facilities are encouraged to provide services that are the most profitable for the facility itself.

Not all patients will need the most expensive services, and not all patients need recurring services. It’s even worse when medical facilities provide poor care because patients will have to go back and pay more money, all for the sake of fixing mistakes that the medical facility made. It’s a model that rewards worse outcomes for the patients.

It Can Result in Prices Being Inflated

Fee–for-service healthcare models are monetarily-driven, and this can result in the prices for services being inflated. There are four main reasons why prices for services may go up:

1. No transparency: Knowing exactly how many services a patient will need is near impossible until services have already been provided. At that point, the patient will have to pay for whatever services they were given. This is a problem because patients will want to know what they’re paying before committing to certain services from specific medical facilities. It’s impossible to compare prices for given services when you use a fee-for-service payment model.
2. Lack of accountability for patient outcomes: There is no individual healthcare professional that oversees patient outcomes. As a result, patient care is poorly coordinated, which causes costs to skyrocket
3. Providers can control prices: Many medical practices and hospitals are combining these days. This can be a problem if you have a fee-for-service model because healthcare providers are granted more power to impose higher prices on their patients.
4. Greater administrative expenses: When your payment system needs a line item for every service in order to justify prices, there becomes a greater strain on physicians, as well as the health system. Repeated disputes over what medical care is necessary only serves to make administrative burdens even greater.

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