How effective are current organizational financial models within the health care industry


Fee-For-Service (FFS) is among the most common financial healthcare model. This financial model is effective especially in the manner through which it benefits a patient’s health. It makes it possible for a patient to consult a physician of their choice and without putting a limitation on the number of visits (Lustig, 2016). Under the FFS model, the physician’s income is pegged on the number of patients that they see. This provides an incentive to the physicians to be easily accessible and to work for longer hours. The model also offers an incentive to the physician to take riskier patients (Lustig, 2016). The model considers the needs of the patients by not restricting the physicians from undertake any due tests or referring patient to specialists.

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Relative Value Units (RVU) Payment System

This model is identified as a means to tackling the flaws in the Medicare and Medicaid systems which prevents them from being long-term options for healthcare facilities. The relative value units (RVUs) are based on the resource-based relative value scale (RBRVS). The mode is structured to increase or decrease monetary return. This is based on factors such as the amount of required physician, expense to the practice, and the associated liability expenses. This model is considered very effective especially due to its preference of procedures requiring technology or surgery as espoused by Lustig (2016). 

Capitation Payment Model 

This model puts greater long-term emphasis on practices offering preventative services. This model does not tie the preventive services to the financial incentives. Income is not directly connected to office visits like in the FFS model (Lustig, 2016). Under this model, the costs for healthcare services are inversely connected to the physician’s income which make the physicians less motivated to overcharge or carry out unnecessary services for the patients. 

ReferencesMatthew Chase Lustig, M. B. A. (2016). An Overview of US Healthcare Financial Models in the Context of Recent and Projected Economic Trends. Journal of Health Care Finance.

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