First published on on June 18, 2013
In response to the question: What changes would you like to see in the way physicians are paid?

This sounds like an “If I were King” question, so I’ll answer it that way.

If I were King, I would want all my subjects to die at age 120, by accidentally falling into an ice crevasse while descending from the summit of Mt. Everest. At night. In this kingdom, physicians are paid according to how close they come to achieving that outcome for each patient.

The incentives in this system are perfect: both the physicians and patients want exactly the same thing. Implementation is tricky, however. Naive approaches would spur physicians to cherry pick healthy patients and then spend lavishly to keep the patient alive and well.

Suppose, however, that each patient is treated, financially, like a public corporation. Each would have a fixed number of shares, and each share would pay an annual dividend based on the improvement in the patient’s health status over the past year. Referrals to other physicians would dilute the holdings of the referring physician, forming a financial disincentive to excessive care that must be balanced against the goal of keeping the patient healthy and vigorous. Perfect.

Aiming the healthcare delivery system squarely at outcome improvements would encourage a long-term outlook, preventive care, and close follow-up of patients. It would transform medically underserved areas into the most lucrative places to practice, ultimately erasing disparities in health. Administering such a system would be data-intensive, but that heavy burden is already upon us.

In this kingdom, healthcare reimbursement derives from clear, results-oriented goals, with inherent checks and balances on spending. Our real-world system is, alas, far from that – it is deranged.

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