Reimbursement: The Problem Is In The Paradigm

I think it is fair to say that in just about every trade or profession, there is a desire to be reasonably reimbursed for one’s level of expertise and the ability to provide a good product to the consumer. It’s not any different if you are a mechanic, a plumber, a physician, or a physical therapist. I think that most consumers want to be able to pay someone appropriately for the work they’ve done – at least in principle.

One of the differences is the presence or absence of a third party payer.

It can become highly frustrating and economically challenging as a clinician to receive dwindling reimbursement from third party payers. So many clinicians will opt for a cash-based approach where they feel there is a direct relationship between the customer and the service provided.

Sounds good, right? Not exactly. The incentives are still not conducive to systemic success. The solution lies in the paradigm used, not how the reimbursement occurs.

In an insurance-based world, a clinician is limited by low reimbursement rates. Most clinicians will continue to complain that reimbursement doesn’t reflect the level of expertise required. Most find that the only way to solve the problem is to use extenders of care or to simply see more patients themselves. The clinician’s time – the one thing that patients truly desire – becomes even more limited.

In a cash-based world, a clinician is still limited. Patients tend to want direct contact time with the clinician, especially if they are using their hard-earned dollars. So what happens? The per session fee goes up in order to cover the perceived level of expertise and time required. Over the long term, if the clinician keeps increasing the fee per hour, he/she will ultimately price themselves out of the market. At that point, it doesn’t matter what you, the clinician, feel your value is, because the market will tell you otherwise.

As it stands, the number of hours in a work week is limited. The fee per visit – insurance or cash – is, ultimately, limited. The only way to increase a clinician’s income is to increase the number of patients per hour, or the fee per hour, or both. However, both of these approaches are old-school paradigms built on the wrong incentives. Either way, it amounts to “do more, get paid more”.

We need a game changer for both patients and clinicians. It starts with the market place itself. If an open market truly existed (without a gatekeeper model in place), then patients would have the freedom to choose the best provider that provides the best outcome, the best price, and the best customer experience.

With that being said, the good clinicians will be busy, and the bad ones won’t be. They will be looking for a career change – and that’s ok.

We don’t doubt that people can establish value and quality in buying a car or a house. People use word of mouth, research, reviews, and their own personal good and bad experiences, to help them out. So why do clinicians suddenly think that patients can’t establish value and quality in health care, especially when their own level of function is at stake?

The real paradigm shift takes place in reimbursement itself – but perhaps not the way you might think. We have always viewed reimbursement in terms of “procedures” and “services provided”. That is how the clinician perceives it.

But what about the patient? Patients come to clinicians seeking a functional outcome. Should reimbursement be in terms of the patient’s perceived value, or the clinician’s oftentimes inflated perception of worth based on “expertise” and “skills”? Shouldn’t the clinician, in some way, be accountable to the patient for the attainment of that outcome?

I would suggest that perhaps the most brilliant clinician is the one that can attain the best functional outcome (relative to the patient) with the least expense (time, money, and effort) based on the best scientific research currently available. That demands input from, you guessed it, the patient. Doesn’t that type of reimbursement strategy resemble most other trades and professions?

An approach like this will require a change in our perception of the role of the clinician in a patient’s care. It will likely involve the use of new technologies in some way or another. It will most certainly demand new business models based of appropriate incentives that reward the effective clinician while promoting value for the patient. It works in all other professions and trades, so why not health care? And if so – the strong would survive and thrive, and patients would be able to relate access, quality, and cost with value. Novel concept, indeed.

Photo credits: Nomadic Lass