Macroeconomics Healthcare

1553 Words7 Pages
Macroeconomics of Healthcare

Douglas A. Propp, MD, MS, FACEP, CPE
Chair, Department of Emergency Medicine
Advocate-Lutheran General Hospital
Clinical Associate Professor of Emergency Medicine
University of Chicago

As Emergency Physicians, we are frequently peripherally exposed to healthcare economic statistics, policies, and debates with little concern for mastering these concepts, feeling that they have little to do with our practice of Emergency Medicine. Although a working knowledge of microeconomics will not aid in arriving at the diagnosis for the elderly patient with mental status changes who we are evaluation at 3 A.M., an understanding of these principles will enhance our roles in positively contributing to the healthcare
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Whereas indemnity insurance was formerly the prevalent means to fund healthcare expenses in this country, the increasing impact of co-payments and deductibles assumed by the consumer has limited resource demand. In addition, capitation which provides an upfront fixed payment to the provider, allowing them to manage the financial risk associated with subsequent expenditures for their patients gained popularity over the past decade. Many have questioned whether the behavior required of the provider in order to balance the revenues and expenses inherent in a capitation arrangement could be appropriately managed within the context of the overriding patient-physician relationship and might even violate the ethical principle of patient beneficence.

One should be able to see that different provider (physician or hospital) behavior can be incentivized based on the payment methodology utilized. For example, if a hospital was paid a fixed amount of money for a hospitalization (e.g., DRG), it would be incentivized to limit both the length of stay and intensity of services for the patient. On the other hand, if the payment methodology was fee for service, the institution might attempt to increase both the length of stay and intensity of services. A per diem arrangement where the hospital receives a fixed daily payment would incentivize a longer length
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