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Hoangmai H. Pham and Paul B. Ginsburg Unhealthy Trends: The Future Of Physician Services Health Affairs, November/December 2007; 26(6): 1586-1598. [Abstract] [Full Text] [PDF] [Reprints & Permissions]

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Why Capitation

Thomas Cox   ( 5 November 2007 )

Change From Within

P. Stephen Novack, D.O.   ( 28 November 2007 )

Why Capitation 5 November 2007
Thomas Cox, Consultant GTC Send comment to journal: Re: Why Capitation nurse.statistician{at}yahoo.com Thomas Cox	Capitation cannot promote efficient health care systems; nor can any efforts, regardless of name, to substitute average costs for variable insurance risks. Capitation payments, in otherwise efficient health care delivery and finance systems, are either excessive and inefficient or inadequate and inefficient. If capitation payments equal average costs to provide services, half the provider's costs will be more/less than the capitation payment. Since half of all providers will receive more/less than they need, capitation is inherently inefficient. Since capitation transfers insurance risks, providers, like all insurers, should receive payments that cover service delivery costs, practice expenses, and an insurance "risk premium" for the provider's over/underpayment uncertainty. Each provider's "risk premium" would be based on the "sample size" of their practices and the variability in service costs. Small providers need larger risk premiums than large providers, reflecting the higher variation in actual service costs they experience when drawing patients from identical populations. Paying all providers "actuarially fair" premiums, in optimally efficient health care systems, results in higher insurance risk management costs, solely due to capitation inefficiencies, compared with equally efficient FFS approaches using large insurers to manage insurance risks. Capitation-induced inefficiencies cannot be avoided because the insurance risks are being transferred to less efficient insurers, and since all providers must anticipate the possibility of being underpaid, these extra cautions necessarily reduce prospective service capacity in an amount equal to the inefficient insurance risk transfers. Eliminating capitation and concentrating on improving financial efficiencies are more appropriate recommendations.
Change From Within 28 November 2007
P. Stephen Novack, D.O., Independent consultant Health organization Send comment to journal: Re: Change From Within psnova{at}yahoo.com P. Stephen Novack, D.O.	Pham and Ginsburg have again provided a well-researched and -reasoned starting point for discussion on American health care. A bit of critique: The Pham and Ginsburg article proposes several responses of policy that can effect a change in physician behavior. I propose a reaffirmation of the mission of each physician, enlightened managerial techniques that are responsive to that mission, and continued private ownership of the health care delivery system. Given: Increasing cost of health care; disparities of access/quality/services I would add cynicism and demoralization of physicians. The "team" of American health care consists of physicians, nurses, hospitals, employers, insurers, government, and the patients we serve. The Center for Studying Health System Change has already described an increase of physicians moving toward larger physician groups. I believe that is due to the desire by physicians to be more representive of their interests on this "team." The entire "team," however, is implicit and overt about its attempt to enhance patient access to quality care. The effectiveness of accomplishing that mission of any of those team members is debatable. The adversarial approach taken by all members of this team is bound to increase frustration and cyncism amomg all its members. Concepts like love, trust, forgiveness, and cooperation have never been discussed openly at any multi-stakeholder meeting I've attended. Dominant positioning is the most obvious behavior. Unfortunately and for the sake of truth, a provocative categorical statement must be made: In the American health care system, physicians are the dominant determinant. I call on physicians themselves to deeply introspect on the mission they set out to accomplish when they first decided to be a doctor. I call on academics in all fields to assist physicians in their quest to accomplish that mission. That requires honest brokering of knowledge in economics, sociology and management, public policy and biomedical. The end of cynicism begins with physicians. Those of lesser moral fortitude should stay home.