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Fee for service drives up surgery rates

Jason Shafrin reports on the link between physician compensation mechanisms and surgery rates.
Here’s the “money quote” –
“When specialists are paid through a fee-for-system (FFS) methodology rather than a capitation or salaried basis, surgery rates increase 155%. There is suggestive evidence that surgery rates fall when primary care physicians are paid on a fee-for-service basis compared to capitation or salaried payments.”
Not addressed is the key question – is the rate of surgery appropriate under either compensation mechanism?

2 thoughts on “Fee for service drives up surgery rates”

  1. You’re certainly asking the right question, Joe. One of the big takeaways from the landmark RAND study was that when people were asked to shoulder more of the burden of their healthcare costs they would forego care. But they were equally likely to forego care that was necessary as they were to forego care that was unnecessary.
    So looking at the “inputs” side of the same equation, when doctors are paid captitation or salary vs. FFS, are the equally likely to beg off necessary surgeries as unnecessary ones?
    I would say the docs would continue to perform necessary surgeries since they have the benefit of education and experience. By contrast, in the RAND study, you could argue that those people who avoided necessary care because of cost did so because they didn’t know any better.

  2. George Bernard Shaw said it better – and almost 100 years ago:
    “That any sane nation, having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg, is enough to make one despair of political humanity.”
    BTW, the U.K today boasts one of the most humane systems of health politics on the planet.

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Joe Paduda is the principal of Health Strategy Associates



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