You get what you pay for

A Global Look at Balancing Demand, Quality, and Efficiency in Healthcare Payment Reform


Building on from our first publication – ‘Healthcast 2020: Creating a sustainable future’, PricewaterhouseCoopers Health Research Institute undertook in-depth discussions with the industry leaders from the Healthcast 2020 report. These industry leaders cited a common fear; the worry that rising health spending will threaten the amount and quality of care they’ll be able to deliver in the future.

Any changes need to be balanced through the payment triad of efficiency, demand and quality. Focusing on too much of any one of these issues can unbalance the triad and change the direction of the health system toward financial non-sustainability.



“What gets paid for gets accomplished”
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Control of healthcare spending is clearly a priority; however control depends on how the care is paid for through aligned incentives. If incentives are not aligned, the quality and quantity of the care provided is affected. A survey of global health leaders revealed that two-thirds thought the performance of their country’s health system was good or very good. However, less than 40 percent gave the payment system a grade of good or better. This is analogous to owning a high-performing vehicle that costs too much to operate – and how sustainable can that be? Any changes must be balanced through the payment triad of efficiency, demand, and quality.

Key findings:

  • Payment systems are not structured to support future delivery models
  • Cost control was ranked as the most important factor in the development of payment systems in the future. In the survey it ranked more important that quality, efficiency or demand.
  • Cost control has already influenced a shift to provider payment systems that encourage efficiency
  • Most countries have few if any financial incentives in the public health system for rewarding quality. There are some moves towards embedding quality and efficiency incentives in payment
  • “Better informed patients” ranked highest as a way to manage demand. “increasing out of pocket payments” ranked lowest
  • 84 percent of respondents said care coordination would do the most to improve quality in their countries. Bonuses for care coordination that are paid to physicians and hospitals were among the top five methods needed to improve cost, quality and efficiency.
  • As more care gets delivered in outpatient settings, capital planning and financing must follow with payment methods that encourage flexibility and innovation. Australia, England, Finland, France, Italy and Sweden include capital costs in their diagnosis related group systems. Models that integrate both hospital payment and physician payment create mutually aligned incentives.
  • As more data from diagnostic test results, patient surveys and electronic medical records becomes available, providers and payers need to use those results to evaluate their reimbursement system.

Payment systems can vary, not only by country but also within each country. Methods include; budgets, salaries, capitation, case-payments (DRG), fee-for-service and pay for performance. Different pay methods have various advantages, disadvantages and unique attributes. While payment systems have historically been retrospective – paying for care delivered – they are becoming increasingly prospective so as to allow providers to plan their services and processes around the payments they expect to receive and for payers to better control their budgets and outlays.

Payment systems are continuously changing, but health executives said they know what the future holds: more emphasis on cost control. Unfortunately in the quest to control costs, other important factors such as quality and efficiency may become marginalised.

At PricewaterhouseCoopers our focus is on providing you with the tools so you can improve the processes and outcomes that impact on quality and safety by.

  • Assisting you to demonstrate measurable health outcomes from the activities you fund
  • Helping you to improve the quality of your processes so your time and resources can be more effectively utilised
  • Providing a cost effectiveness analysis to help define and prioritise the activities and areas that provide the most value to the end user
  • Undertaking a workflow analysis to ensure your people are focused on the areas that make a difference to the patient experience.

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