Let’s stop purchasing volume (as insurance premium payers) and start purchasing outcomes.
The fee-for-service (FFS) payment model has outlived its usefulness (Porter, Kaplan 2013). Currently, a significant portion of our healthcare system’s funding, particularly in specialized care (both in the public and private sectors), is still based on the FFS model. Under this model, the entire financial risk is borne by the insurance provider (and consequently by those paying insurance premiums—the individual), but there is no guarantee that the patient will receive the appropriate treatment in the right amount, at the right time, or in the correct sequence.
Healthcare providers are motivated to meet their contractual quotas and offer as many services as possible within these quotas, without directly questioning the necessity of the services. Indirectly, there is an interest in generating additional patient flow to increase appointments, but FFS excludes the possibility of viewing the patient’s treatment journey at the specialized care level as a whole. FFS also prevents the possibility of giving the patient, for example, 3-4 times more attention after the first visit to avoid 10 additional follow-up visits where the patient returns with a worsening condition. We can create central digital systems, involve more private or public sectors, or train more doctors and nurses, but if the Health Insurance Fund and other insurers (i.e., taxpayers or premium payers) only purchase service volumes, then they will only get service volumes, not better quality of life for patients, better treatment outcomes, or prevention of chronic disease exacerbation. Countries like Denmark, the USA, Germany, the Netherlands, and the UK are abandoning or have partially abandoned FFS. This shift is mostly seen in some successful “islands” within these health systems. Many researchers (Porter, Kaplan, Gawande, Emanuel) systematically criticize the FFS model, and its abandonment is also supported by several organizations (WHO, ACP, European Commission).
FFS should be replaced with outcome-based, value-based, or episode-based (bundled payment) models that incentivize healthcare providers to change processes according to patient needs. Payment models should be created (by insurers for purchasing healthcare services) that motivate healthcare providers to change their processes and measure outcomes. Instead of purchasing 10 appointments and 3 surgeries, we should purchase the treatment of a patient with a specific diagnosis/health problem from the start until a certain interim goal is reached (restoration of work capacity, quality of life). Within this payment model, the healthcare institution could decide on the most optimal process and the most suitable activities and sequence for the patient’s treatment to achieve the best possible outcome.
This idea is not new (it was proposed in Estonia 10-15 years ago), but implementing this change is difficult and requires enormous courage and systemic thinking. Many things need to be reorganized simultaneously. The question remains whether we have the courage to undertake this. Otherwise, the discussion will remain at the level of fine-tuning (tax rates, tax exemptions, contract volumes, training volumes). However, the elephant is in the room, and it is not being addressed because it is a complex issue that requires significant changes. But if these changes are not made, other changes might come with a big bang, and ultimately, the patient, whose voice is not heard, will suffer. Therefore, let’s start moving towards innovative payment models that will truly improve the processes across the healthcare system.
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Emergency services for a fee
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Additional suggestions
The idea is not adaptable to healthcare. For example, the activity-based idea in the preparation of the state budget failed because the results were indescribable and only became apparent after the budget funds had been spent. Therefore, there was no actual management; instead, there were just wordplay contests. In economics, the achievement goal is clear (profit), whereas in healthcare, the outcome is multifaceted and can be assessed in many ways. Ultimately, patients accumulate health problems throughout their lives and, in the end, die of old age with their illnesses. But the rhetoric is appealing and well-structured.
https://www.fin.ee/riigi-rahandus-ja-maksud/riigieelarve-ja-eelarvestrateegia/tegevuspohine-riigieelarve
Transitioning to service-based management allows for a more customer-centered approach and more efficient resource management. Public services are divided into indirect services, direct services, external support services, and internal support services. The classification of services helps better define target groups and set metrics. Additionally, the classification of services serves as the basis for developing a budget model for the area of governance, where, for example, the costs of support services are associated with the services to which they add value.
It should be noted that there have been several trials and projects in Estonia where a shift away from fee-for-service (FFS) has begun, such as the budget-based funding for Hiiumaa Hospital, the stroke treatment pathway, and the psoriasis remote monitoring model. The primary care payment model, in comparison to specialist care, has been very thoroughly designed and serves as a good example. Additionally, the Health Insurance Fund’s accelerated treatment pathway program has been launched, which will certainly provide valuable input for creating more modern payment models instead of FFS. Knowledge and experience are growing.
It’s also important to understand that this would never be a 100% outcome-based payment system, but thinking about outcomes/quality points us in the right direction for where to go (e.g., bundled payments, quality-based, budget, capitation, episode-based, pathway-based payments, etc.). The approach must be tailored differently for various specialties and diseases. Ultimately, this change could create a win-win situation for all parties involved by reducing unreasonable incentives that drive individuals and organizations to take actions they wouldn’t otherwise take in order to achieve the best treatment outcomes. It’s not easy, but healthcare has never been simple.
Especially pleasing is the idea that this would reduce patients’ exposure to ionizing radiation. Planning could help better avoid unnecessary X-rays, for example.