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Chapter 16: Problem 16

What is the key difference between a fee-for- service healthcare system and a system based on health maintenance organizations?

Short Answer

Expert verified
The key difference between a fee-for-service healthcare system and a system based on health maintenance organizations lies in the reimbursement method for healthcare providers. In a fee-for-service system, providers are paid for each individual service performed, potentially incentivizing over-utilization of healthcare services. In contrast, an HMO-based system reimburses providers with a fixed payment per patient, encouraging careful management of care resources and a focus on preventive care to minimize costs.

Step by step solution

01

Define Fee-for-Service Healthcare System

In a fee-for-service (FFS) healthcare system, healthcare providers (e.g., doctors, hospitals) are paid for each service they perform, such as tests, procedures, and consultations. This model incentivizes providers to deliver more services, as their reimbursement is directly related to the quantity of care provided.
02

Define Health Maintenance Organization-Based System

In a health maintenance organization (HMO) based system, healthcare providers are given a pre-determined amount (a capitated payment) for each patient, enrolled in the HMO, regardless of the number of services provided. The HMO is responsible for managing the healthcare needs of its members and contracts with healthcare providers to ensure the provision of services. This model emphasizes preventive care and cost containment.
03

Identify Key Difference

The key difference between a fee-for-service healthcare system and a system based on health maintenance organizations is in how the healthcare providers are reimbursed. In a fee-for-service system, providers are paid for each individual service they perform, which can incentivize the over-utilization of healthcare services. On the other hand, an HMO-based system provides a fixed payment per patient, which can encourage providers to carefully manage care resources and focus on preventive care to minimize costs.

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