Health care providers respond to financial incentives. They agree. And it’s not an insult.

Health care providers rarely admit that their care is influenced by financial incentives. In The 8 Basic Payment Methods in Health Care, Kevin Quinn disagrees.

[P]ayment methods clearly affect whether, how, and how much care is provided. Examples include hospital length of stay, diagnostic imaging in physician offices, home health care visits, coordination among physicians and hospitals, the volume and mix of services under fee-for-service medicine, and much more. Financial incentives seem particularly potent in situations of clinical ambiguity, such as diagnostic tests, follow-up visits, and some procedures. Effects of financial incentives often become more evident over time, such as decisions to open and close business lines and medical students’ choice of specialty.

If financing didn’t affect health care delivery, nobody would argue that payment cuts will harm patient care. However, that’s a standard argument providers make every time a Medicare payment cut is proposed. And though it may not apply to every circumstance, it’s not necessarily a bad argument. My point is that making the argument admits that how and how much providers are paid affects the care they deliver.

Similarly, how much I get paid affects my children’s education. Just as clinicians provide care under resource constraints, I parent under resource constraints. I cannot afford to live in the town in America with the absolute best schools, but my kids might learn more if I could. I cannot afford to take a year off to live with my kids in Paris or Hong Kong, but, arguably, it’d be an educational enhancement for my kids.

My kids don’t get every possible educational advantage money could by; they get every possible educational advantage I can reasonably afford with the money I have. Likewise, clinicians cannot provide every patient with every possible thing that might make them healthier (which, in many cases, wouldn’t be health care anyway). By and large, clinicians do the best they can with the resources they have available.

Saying that the nature of health care delivery responds to how and how much providers are paid isn’t an insult any more than saying I’d provide my kids with different educational experiences if I were paid more (or less or differently). It’s just admission of the fact that doing stuff requires resources and resources cost money. Different kinds and amounts of payment causes different kinds and amounts of resources to be affordable, therefore purchased, which affects the nature of care. Pay me in vouchers redeemable only for a home in the nearby town with a better school system or for flights to Paris and my children’s lives would no doubt be different.

Quinn’s paper is subtly awesome and a recommended read. I will write more about it in the future. He’s also the author that wrote one of my favorite opening paragraphs to a paper.


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