Hospitals Aim to Apply Direct Payments of Care Delivery to Increase Resources

August 28, 2012
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A New York state hospital system is carefully laying the groundwork to essentially cut out the middleman, as it were, in an effort to constrain costs as it shores up the services it provides. The system is accepting flat-rate payments for care rendered, as opposed to continuing with the reimbursement model the vast majority of the nation’s hosptials use to generate revenue in todays healthcare economy. Some interested systems elsewhere are using the challenges sure to be unleashed by President’s Obama’s reform law initiatives as an impetus.

A New York state hospital system is carefully laying the groundwork to essentially cut out the middleman, as it were, in an effort to constrain costs as it shores up the services it provides. The system is accepting flat-rate payments for care rendered, as opposed to continuing with the reimbursement model the vast majority of the nation’s hosptials use to generate revenue in todays healthcare economy. Some interested systems elsewhere are using the challenges sure to be unleashed by President’s Obama’s reform law initiatives as an impetus.

Proponents say consumers would benefit from streamlined care and possibly lower costs, but some also worry they could find themselves with fewer choices and limited access to outside experts and cutting-edge treatments. […]  Driving the change is the transition from fee-for-service payment schemes, which pay for each doctor’s visit, appendectomy or CT scan separately, to one that pays providers a lump sum per person per year. This will shift more of the financial risk of medical care from insurers to providers.

With more hospitals considering assuming more of the risk by doing this — and ultimately acting like an insurer, this could be the sign of a fundamental shift in hospitals’ contributions to the healthcare marketplace. Striving to keep beds empty rather than full, hospitals could command more authority in flexibility in delivering care as a direct competitor to insurers. Providers working within that system (physicians) could assume the financial benefits that may come with the effect of reform on other payment structures — namely, Medicare and Medicaid.

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Critics cry shades of a managed care ”redux”; proponents push for the ”streamling of care” that would put more money in hospitals’ pockets while increasing the delivery of preventitive and appropriate care. Regardless of the way one sees this trend, it does bear watching.