{"id":20363,"date":"2018-07-27T09:45:54","date_gmt":"2018-07-27T13:45:54","guid":{"rendered":"http:\/\/www.carecloud.com\/continuum\/?p=20363"},"modified":"2025-10-21T17:10:29","modified_gmt":"2025-10-21T17:10:29","slug":"value-based-care-vs-fee-for-service","status":"publish","type":"post","link":"https:\/\/carecloud.com\/continuum\/value-based-care-vs-fee-for-service\/","title":{"rendered":"Reimbursement Shifts: Value-based Care vs. Fee-For-Service"},"content":{"rendered":"

In January 2018, Amazon, Berkshire Hathaway and JPMorgan announced that they planned to jointly launch a new, healthcare-focused company with the goal of improving their U.S. employees\u2019 satisfaction with their healthcare and reducing the cost of that care. <\/span><\/p>\n

While few details about the joint venture have been released since it was first announced, surgeon, professor and author Atul Gawande, MD, was recently named CEO. In a <\/span>press release<\/span><\/a> announcing Dr. Gawande\u2019s appointment, he shared his hopes to improve healthcare delivery and outcomes and eliminate wasteful spending. <\/span><\/p>\n

\u201cThe system is broken, and better is possible,\u201d Dr. Gawande said. <\/span><\/p>\n

The sentiment that the U.S. healthcare delivery system is broken is one that healthcare leaders, politicians and patients across the nation share. <\/span><\/p>\n

According to National Health Expenditure data, other economically comparable countries spend about half as much per person annually on healthcare as the United States. Health spending in the U.S. has consistently grown faster than the economy, with <\/span>2016 data<\/span><\/a> showing that health spending accounted for almost 18 percent of the nation\u2019s Gross Domestic Product. <\/span><\/p>\n

As health policy leaders and others consider the future of healthcare in the U.S., controlling costs while improving quality is a top priority. There is widespread recognition that our nation\u2019s current healthcare expenditure is not only undesirable, it\u2019s unsustainable.<\/span><\/p>\n

Fee-for-Service Reimbursement<\/span><\/h2>\n

Historically, providers and healthcare organizations have been compensated for care provided based on <\/span>fee-for-service<\/b> reimbursement models. When a provider is reimbursed based on a fee-for-service model, they are compensated for each procedure, test, treatment, etc. they perform, regardless of whether that procedure, test or treatment results in a better outcome for the patient. <\/span><\/p>\n

Essentially, with the fee-for-service model, providers are financially rewarded for quantity over quality. With this payment model, it\u2019s easy to see how patients can sometimes undergo unnecessary tests or treatments when perhaps less invasive, lower cost, and just-as-effective options are available. \u00a0<\/span><\/p>\n

In his article, \u201c<\/span>Healthcare\u2019s Dangerous Fee-For-Service Addiction<\/span><\/a>,\u201d Robert Pearl, MD, argues that providers and healthcare organizations that have grown accustomed to the fee-for-service reimbursement model have \u201cgrown dependent on providing more and more healthcare services, regardless of whether the additional care adds value.\u201d <\/span><\/p>\n

Dr. Pearl cautions that as long as providers are paid for doing more, that\u2019s what they\u2019ll continue to do. <\/span><\/p>\n

In summary, fee-for-service reimbursement models:<\/h3>\n