Thought Leadership

You get what you pay for: A global look at balancing demand, quality, and efficiency in healthcare payment reform

Healthcare payment systems need to change to meet future demands and stakeholders need to come together to leverage incentives to positively change behavior and improve outcomes. This in-depth report by PwC's Health Research Institute examines the current landscape and the key levers in driving such change.

Beyond increasing efficiency, increasing quality, and controlling demand, health leaders around the world are re-evaluating their health payment systems to help them achieve these objectives. The report analyses the close link among efficiency, quality, demand management, and the structure of the healthcare payment system.

Tomorrow's payment system will need to be responsive to technology and clinical change. Key findings from the PwC report include:

  • Most industrialized countries use gatekeepers such as physicians to control the demand for healthcare, ensure patients receive the right treatment and prevent over-utilization or use of more expensive treatments than needed. Yet, traditional gatekeeping systems are broken or breaking down, according to PwC.
  • Case-based prospective payment that groups reimbursement rates into diagnostic related groups (DRGs) is the emerging standard for hospital payment, having proven to improve efficiencies. This type of hospital reimbursement already has been adopted by 70 percent of countries that are part of the Organisation for Economic Co-operation and Development (OECD). However, it does have drawbacks, particularly with managing patients across the continuum of care and forces the focus onto transactional care.
  • A number of countries that have historically had tax-funded or social systems are adding market-based competition to spread the burden of payment and to encourage efficiencies. But multiple funding systems and payers operating together in the same market creates conflicting incentives and causes confusion if incentives are not coordinated and properly aligned.
  • Reimbursement to general practitioners and primary care physicians is far more varied among different countries and regions than reimbursement to hospitals. Models that integrate hospital and physician payment have proven best at creating mutually aligned incentives.
You get what you pay for: A global look at balancing demand, quality, and efficiency in healthcare payment reform

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