Is a Paradigm Shift in US Healthcare Reimbursement Inevitable?

Abstract

The fundamental goal of health care is to increase longevity and optimize physical, psychological, and social well-being at the individual, community, and society levels. An optimal healthcare system should fulfill these goals in an efficient and cost-effective manner. Although we believe that our healthcare system in the United States is going in the right direction, there is certainly room for improvement.1 In the present article, we review some of the shortcomings of the present system and offer an alternative philosophy that might facilitate a more viable and efficient approach to healthcare expenditure. In the present environment, health care is generally viewed as an expense, and, because “costs” are managed by budgets, this translates into a fiscal mindset in managing health care. Naturally, this attitude generates a pattern of fragmented thinking. That is, the individual components of healthcare cost, such as pharmacy and hospital inpatient admissions, are considered independently, whereas total healthcare value and other important patient outcomes are overlooked. This fiscal mindset also does little to encourage the provision of quality care because reimbursement is based more on quantity. The natural consequence of this is exemplified by the results of a recent study in which patients received only 55% of the recommended care.2 The failure of the current system to promote quality care is also apparent in the infrequent use of incentives for preventive care or proactive disease management. Indeed, such services are often not reimbursed. In short, the focus is on episodic care rather than on encouraging proactive health management. This contributes to the current environment in which 50% of Medicare dollars are being spent on 5% of the Medicare population.3 Finally, a cost-based system fails to consider broader societal benefits of improving health, such as increased productivity and improved quality of life. Our criticism of …