The current healthcare system is plagued by economic challenges highlighted by increased spending. The economic challenges facing healthcare include a lack of price transparency, and adequate payment model, and monopoly power imposing substantial price hikes on medical products and services. As patients assume more significant financial responsibility for their healthcare needs, they are less aware of medical procedures, drugs, and services (Gusmano et al., 2019). Lack of price transparency threatens public trust and increases healthcare spending. For instance, patients are likely to negotiate high medical fees when less informed on the options available and pricing. Access to information on the prices of various care received by patients is the most effective way of mitigating the risk of price transparency.
The lack of an established payment model and the use of traditional reimbursement models is a challenge in the healthcare system. The standard payment models include fee-for-service (FFS), episode-based payment (EBP), outcome-based payment models (OBPMs), prospective payment models, and population-based payment (PBP). The payment model influences the cost of care, accountability in care, and quality of medical services and outcomes. Additionally, payment models affect physicians’ practice, such as practice patterns, wait times, and the quality of services provided. The prospective payment model is an example of effective reimbursement that improves care quality and increases accountability (Finkelstein et al., 2018). Health care amount is predetermined and fixed to create a code-based reimbursement that incentivizes coding and billing.
The US healthcare system is dominated by monopolies that determine pricing and quality of care. Low competition in the healthcare sector conditions price-fixing, cost-push inflation, poor-quality products, and lack of incentive to invent. Whenever patients receive poor quality care or are overcharged, they cannot substitute the goods and services with better alternatives. Commercial health plans have low bargaining power while dealing with monopolistic providers. For instance, Becton Dickinson Co in the US is responsible for manufacturing over 60% of injection needles and syringes (Parys, 2018). The US can mitigate the risk of monopoly in healthcare by controlling pricing and regulating mergers in healthcare.
References
Finkelstein, A., Ji, Y., Mahoney, N., & Skinner, J. (2018). Mandatory Medicare bundled payment program for lower extremity joint replacement and discharge to institutional postacute care: interim analysis of the first year of a 5-year randomized trial. Jama, 320(9), 892-900.
Gusmano, M. K., Maschke, K. J., & Solomon, M. Z. (2019). Patient-centered care, yes; patients as consumers, no. Health Affairs, 38(3), 368-373.
Parys, J. V. (2018). ACA marketplace premiums grew more rapidly in areas with monopoly insurers than in areas with more competition. Health Affairs, 37(8), 1243-1251.