Incentives and financing methods

Abstract

On an incentive theory background the different financing methods for health care are discussed. Three main categories of financing methods are presented: (1) global budget solutions (capitation and global budget based on historical costs), (2) per-case reimbursement (per-diem rates, fee-for-service, prospective reimbursement on the basis of product groups, episode of care-based reimbursement, result graded reimbursement with use of e.g. the Oregon model concept), (3) hybrid methods of financing. Financing methods can be used to obtain different goals. Organizations and individual physicians seem to respond generally in the same way to similar incentives. Also unwanted effects seem common. Shifts in financing methods over time may look natural to attack problems. Empirical research has demonstrated financing methods as important tools in the management of a health service. Knowledge of possible health effects for the patients as a consequence of financing methods seems limited.