Fee for Service, Value Based Care and Capitation as Payment Methods

Fee for service is a new payment model in the healthcare industry that gives the option of providing treatments and thus receiving payments separately and not in bundles. This is considered an advantage to physicians and healthcare providers hence the pushback on the perceived shift from Fee for Service to Value Based Care. Value based care is quite different or actually very different is it completely changes the way care is given and the way care is paid for. In value based care, instead of patients paying for the care, they order, for example, the number of tests they have to take, they instead pay for the value of care they receive or the value of care that is delivered to them. The advantage of this system (the value based system) is that it guarantees that higher value care is provided to patients but it is not is great for care providers.

Physicians, hospitals, and healthcare organizations as a whole complain that the value based care system provides a significant financial burden to them in terms of fees and penalties that get when they default (a rather strict system) and the law payment they receive in comparison to what they received under the fee for service system.


The Argument For and Against Capitation


Capitation is a performance-based system where caregivers are incentivized financially to provide the kind of treatment that promotes health and wellness as opposed to treatment designed to increase profits. One might think that this goes without saying, but the healthcare industry is a quite complicated place in which the line is often blurred between providing the best care and dealing with financial issues.

Considering the high cost of care, the convoluted healthcare insurance system, and the deep hole of corporate greed that is the pharmaceutical industry, many healthcare organizations are forced to put their finances above the well being of patients. This is, of course, unethical and wrong, but like I said, the line can be quite blurry. Under the capitation healthcare reimbursement model, physicians, nurse practitioners, physician assistants, and other healthcare service providers are paid an established amount for every patient they are assigned to within a given time-frame regardless of whether the individual requires or seeks care or treatment.

The amount they are paid is based on an estimated calculation of what the expected care that a patient might receive. The higher the estimated amount of care a patient is expected to receive, the higher the amount paid to the pare provider. There are three types of capitation

Primary Capitation: This is when primary care physicians receive payment for their patient members from their Health Maintenance Organization (HMO)

Secondary Capitation: In this type of capitation, Health Maintenance Organizations (HMO) broker a relationship between PCPs and secondary providers in which those secondary providers receive capitation payments based on the physician’s number of patients

Global Capitation: Providers are reimbursed per/member and per/month based on the total number of members in the network.

The Role of Technology Companies in the Future of Healthcare


This is the age of technology and technology has crept into almost every industry there is, including the healthcare industry. Many leading technology companies are expanding into healthcare and are bringing with them their groundbreaking and innovative technology that would hopefully revolutionize the healthcare industry. I mean the way care is given, received, and paid for could use some improvement and that is what these technology companies plan to do. The parent company of Google, Alphabet has filled a total of 186 healthcare patients. And the three of the leading innovative technology companies in the industry - Google, Apple, and Microsoft has filled up to 300 patents that are related to the healthcare industry. These companies are highly competitive and this competition means that they push each other to produce the best products and services as they try to outdo each other.

Based on the patents filed, Apple is focused on further developing the ability of the iPhone to capture and use patient biometric data. Considering the importance of data and patient engagement, it looks like Apple plans to kill two birds with one stone which is a good thing. The disadvantage is that their research is focused on using their products (The iPhone) which is on the high price range and not accessible to lower income communities. Makes the innovation quite limited in its ability to improve overall population health. Google is focused on extending its artificial intelligence research and breakthroughs into helping physicians. Microsoft has focused on developing devices aimed at monitoring chronic conditions.


Considering why corporations are formed and how they are operated, it is obvious these big tech companies are expanding into the healthcare industry because of the projected profits they can make amongst other advantages. The rising world population, rising population of aged individuals, and the increased development of other countries due to globalization mean that there is and will continue to be an increased demand for healthcare. So these companies want to get in now and take advantage of the growing market. Regardless of their motives, it is obvious that their involvement will help greatly improve the quality of care being given and being received and thus increase the overall quality of population health.