Hi there. My name is Frank Eijkenaar and I'm an Associate Professor of Health Economics at Erasmus University. In my research and teaching, I've mainly focused on the fascinating question how to optimize payment methods for health care providers. This question intrigues me because it still hasn't been answered completely even though it has long been at the center of health policy debates in many countries. In other videos about the preconditions for regulated competition, you've learned that consumers, insurers as purchasers of care, and care providers should be financially stimulated to consume, purchase, and provide care in an efficient way. This and the next videos focus on financial incentives for providers, and specifically on how best to design them. As you can imagine, these incentives depend directly on the way in which providers are paid for their services. In other words, on the payment system. As you may recall from another video, provider payment is one of the three medic care tools that competing insurers may use to make the transition from passive payer to active purchaser of care. Although the main focus of this MOOC is unregulated competition in health care systems, it's important to highlight that my videos are also relevant to noncompetitive systems. Worldwide, an interesting trend can be observed towards so-called value-based payment systems. This typically entails major reforms of the current ways in which providers are paid. While these reforms come in many different flavors, the essence is that stakeholders work towards payment systems that stimulate providers to maximize value which can be defined as the ratio between achieved quality outcomes and patient experiences on the one hand and the cost of the care on the other hand. In this video, you will learn more about the main drivers of provider payment reform in health care. These drivers can be summarized in three categories. Let's have a closer look at each of them. The first driver of payment reform stems from two factors. First, we know for a fact from plenty of research that financial incentives affect provider behavior. For example, providers who are paid fixed fees for each visit, tests, or treatment tend to deliver more care than providers who receive a fixed salary. Providers of the first type will often be inclined to say to their patients, "Come back next week for a checkup." While providers for the second type are more likely to say, "Only come back when you feel the need." The second factor is that because of their superior knowledge, providers are in the position to influence patients demand for medical care. Combined, these two factors imply that it's important to design the payment system in such a way that it's well aligned with value. But that's exactly what goes wrong in practice. This brings us to the second driver of provider payment reform. Have you ever thought about how your doctor is compensated for the time and treatment he gives you when you visit them? Well, regardless of where you live or the type of doctor you're consulting, there's a good chance he's paid separately for the visit itself and for the tests and treatments he provides to you. In fact, this payment method which is called fee-for-service is still one of the most frequently used methods for paying healthcare providers. Two to four important drawbacks however, fee for service is poorly aligned with value. The first drawback is that fee-for-service rewards volume which could result in over-treatment and unnecessarily expensive care. This is simply because providers are being paid more for doing more. It's exactly for this reason that payment reform initiatives often use the phrase from volume to value. The second drawback of fee-for-service is that it maintains a fragmented delivery of care. This is because coordinating care with other providers and making sure that patients are treated by the right provider at the right time and place is not rewarding. This is an increasing problem given that more and more people suffer from multiple complex diseases requiring well-coordinated care by different providers. A third drawback of fee-for-service is that providers are paid for treating patients. This means that prevention of health problems is dispersed simply because it would imply less income. A final drawback is that fee-for-service has no link with good quality of care in terms of health outcomes and patient experience. In many countries, the shortcomings of current volume-based payments had been linked to steady shown ample room for value improvement. Examples are avoidable complications, duplicate services, and waste. There's no consensus that too often care delivery falls short of its potential, and that flock payment systems are one of the driving forces behind this. A final driver of payment reform is that new opportunities for linking payment to value have emerged. Better quality measurement tools, advances in information technology, and more inclusive data systems have made it increasingly possible to actually measure the outcomes of care. Purchasers may then use these measures for paying providers based on those outcomes. However, as you will learn in the next videos, this is much easier said than done. So let me summarize. In this video, you've learned that provider payment reform is driven by three factors. First, providers reacts to financial incentives and are able to influence demand. Second, predominant payment systems are poorly aligned with value, with value being defined as optimal health outcomes and patient experiences at the lowest possible costs. Third, new opportunities have emerged for linking payment to value. Thanks for watching. In the next videos, you will learn more about some important theories on payment incentives and about different types of value-based payment. See you there.
