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Pay-for-Performance vs. Fee For Service Compensation Model

The fee-for-service model of health care is neutral with regard to differences in the quality of health care. The pay-for-performance (P4P) model of health care attempts to set targets to measure quality care. If quality targets are met, providers are rewarded financially. This model is gaining increased popularity in both the public and private sectors. It is, however, not without its critics.

In this week's Discussion, you and your colleagues will compare and contrast the pay-for-performance model and the fee-for-service model of health care.

To prepare for this Discussion:

Consider how the P4P model affects the overall quality and profit margin of health care.
Consider how the traditional fee-for-service model affects the overall quality and profit margins of health care providers.

By Day 4, post a comprehensive response to the following:

What are the underlying goals of P4P and fee-for-service models?
Are there risks to patients in a P4P model?
If you were a patient, which model would you prefer the hospital to follow? Why?
If you were a provider, which model would you prefer to be paid for? Why?

Solution Preview


Thank you for your question and submitting to Brainmass. I have written down some points for both the general discussion section of your question as well as the specific questions. I hope that you find the answers and points useful. While these are ideas of my own, I also did some research on the subject of your question, and have posted the references at the bottom.

Thank you again,

Jonathan Krieger, PhD

General Discussion:

The Pay-for-performance (P4P) model is a change from the standard fee-for-service model that the majority of health care provides in the United States operate under. In the fee-for-service model, a health care provider is paid for any services he or she provides to the patient. In the P4P model, physicians are paid for meeting specific performance criteria and performance targets that are linked to the health and well-being of patients.

The P4P system is sometimes called value-based purchasing, or quality-based purchasing. The main goal of P4P compared to fee-for-service, is to ensure that patients receive timely, cost-effective care. This becomes especially true in the cases of chronic care. With improved quality of long-term care, patients essentially should remain healthier for longer periods of time, and thus complicates related to chronic disease should decrease. This system, in theory, ...

Solution Summary

The Payment-for-Performance model of health care provider compensation versus the fee-for-service model are discussed including definitions, the pros and cons of each one and an examination into which is best for patients and which is best for providers.