Stop paying for more. Start paying for better.

Making healthcare incentives healthier

Everyone in the healthcare industry wants to make money. That’s not a problem. The problem is what they’re getting paid for.

Right now, health plans, doctors, hospitals and pharmaceutical companies all get paid more if they do more: more procedures, more drugs, more hours billed. Instead, payment should be based on:

1. 01

   Improving patient health and quality of life

2. 02

   Delivering consistent, high-quality service

3. 03

   Operating efficiently and keeping costs down

4. 04

   Using simple, standardized payment contracts

A better plan for everyone

The changes we need to make are actually pretty straightforward. Health plans should require 5% of pay to be tied to quality scores.

Primary care physicians should be paid per-member-per-month with bonuses for health outcomes, patient satisfaction, and efficiency. Specialists can be paid similarly with case-based outcome payments and bonuses. Hospitals should get per-capita monthly payments with outcome bonuses. And pharmaceutical companies, well, they actually need a lot more changes that we’ll discuss in a future segment.

How do we get there?

We need federal legislation. We should require Medicare and Medicaid to transition all eligible payments to standard pay-for-outcomes models within 2 years and require employers paying for healthcare coverage to do the same. That will push all health plans, hospitals and physicians to create a new payment structure standard. And because employers will be financially motivated to abide by this approach, they’ll get on-board and make the new model nearly universal.

We don’t have to reinvent the whole system, we don’t have to change human nature: we just have to fix the incentives.