Fee-for-Service vs. Outcome-Based Models and the Effect on Healthcare Costs

In the final part of Healthcare Matter’s interview with Anupam Jena, MD, PhD, we discuss how the move from the current fee-for-service model to an outcome-based reimbursement model will affect the cost of healthcare in the United States. Dr. Jena explains that he does not think that this change will have as great an effect as is often supposed, as there is already a great deal of variation in spending among doctors. The reasons for this are unclear, but may reflect differences in training and physician risk tolerance.

Finally, we talk about the implications of Dr. Jena’s study for practicing physicians. Dr. Jena explains that physicians should not take his study’s results as an indication to change their behavior, i.e. that they shouldn’t start ordering more tests because of the study. However, the study raises important possibilities, including the idea that extra healthcare spending is not necessarily wasteful, and may, at times, lead to better outcomes for patients as well as the side benefit of physicians being sued less often.

A medical doctor and economist, Dr. Jena is Associate Professor of Healthcare Policy and Medicine at Harvard Medical School and an assistant physician at Massachusetts General Hospital. His research areas include medical malpractice, the economics of medical innovation and cost effectiveness, geographic variation in medical care and insurance benefit design.

See Part VII of our wide-ranging interview with Dr. Jena below, or watch the entire program here.


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