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Capitation poses the least financial risk to physicians
10%
12/126
Fee-for-service pays physicians a set amount of money per unit time for every patient under their care
21%
26/126
Fee-for-service may incentivize physicians to increase healthcare utilization irrespective of quality
49%
62/126
Fee-for-service poses the most amount of financial risk to physicians
5%
6/126
Capitation may provide perverse incentives to decrease preventive medicine visits
13/126
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Because fee-for-service compensates physicians for each health care service rendered, the financial risk to physicians is limited, but incentives to over-utilize healthcare are present. The majority of healthcare provided in the US is compensated as fee-for-service: each service rendered by a hospital or provider is billed and compensated for. As such, increasing volume of services rendered irrespective of clinical utility increases revenue and subsequently profits. This both decreases financial risk, as all work is ultimately compensated, and also increases healthcare utilization. Emanuel et al. describe the forces which contribute to the increased cost of US healthcare, of which over-utilization of healthcare is sited as the most important factor. Fee-for-service payment incentivizes over-utilization. While healthcare is guided by more than maximizing profits, higher payments offer a strong incentive to what is "often a slim clinical rationale for an intervention." Moreover, fee-for-service systems also discourage physicians from undertaking less well compensated, but appropriate management options such as watchful waiting. Arrow et al. report on a series of multi-disciplinary workshops tasked with devising strategies for making US healthcare sustainable. Their first and primary recommendation is the repeal of fee-for-service systems and the implementation of more innovative compensation strategies such as capitated systems and/or those that reward quality metrics over volume. Illustration A demonstrates the costs of healthcare utilization in the US as described by Emmanuel et al. (reference above). Incorrect Answers: Answer 1: Because the amount of compensation per patient is fixed, providing care beyond that level may cause physicians to be reimbursed less or not at all. Answer 2: This compensation scheme describes capitation. Answer 4: Fee-for-service poses the least amount of risk to physicians, as each service is reimbursed generally without limit. Answer 5: Capitation may incentivize physicians to improve preventive medicine as on average it may decrease healthcare costs and increase profits.
3.3
(3)
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