Find the Right Pace for Innovation

Philip Betbeze, for HealthLeaders Media , August 24, 2012

But for some hospitals and systems, this could mean a 20% or 30% adjustment to the revenues they are used to, including many of the top hospitals and health systems in the country—at least according to public opinion.

Fenstermaker says whether most or even many hospitals and health systems will ultimately be able to navigate such a drastic change depends on coordination of the shift between private payers and the government, although perhaps that's wishful thinking—sort of like betting that Congress will cooperate.

"The government and [commercial] payer side need to move at the same pace," he says. "If you have half on capitation but the rest is fee-for-service, that's going to create a mess. That's what happened in the 90's and it made HMOs fail."

A further shift toward paying for value will come with so-called bundled payments, though despite their prominence in public discussions and in industry circles such as HealthLeaders magazine, they have yet to be widely or even narrowly, implemented.

"The system has to change in this direction," says Fenstermaker. Combined payments will drive out costs…but unless the system gets integrated, where specialists' and hospitals' incentives are aligned, the whole thing will fail."

Philip Betbeze is senior leadership editor with HealthLeaders Media.
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