DRG payor system
Pros
DRG is a cost effective method. The system reduces the cost per case through providing cost-effective services. The hospital will enjoy benefit as it will save money and get a reward from per-case payment. The cost per admission will be reduced by reducing the length of stay (Berenson, 2016). Other advantage in this system is that hospitals will increase the admissions by prolonging the length of stay or by admitting new patients. Profitable admissions will play an important role in increasing revenue. The payment system encourages hospitals to offer quality services through competition. In this case, competition will emerge when hospitals will increase admissions and recruit qualified doctors who are specialized in treating different illnesses (Berenson, 2016). On the same note, specialization in specific services will increase quality and cost. With the system, hospitals will create transparency, quality decision making with the use of data, increase in collaboration and quality health care services.
Cons
The reduction of length of stay and cost per case will lead to over admission of patients. This also will result to under provision of services. When offering services, the physician will admit high number of patients and provide premature discharges. A major limitation will become apparent in physicians’ role. Traditionally, physicians were following ethics and they could make decision and control the services (Berenson, 2016). However, physicians will concentrate on making profit and hospital success but not quality services. Medical technology will also be affected because the system will focus on current system of the hospital and not the implementation of new technology in order to offer quality services. This means that certain services which require modern technology will be eliminated (Berenson, 2016). Note that DRG system will not reimburse a new technology and for this reason hospitals will be unable to access expensive equipments.
Capitated payor
Pros
Capitated payor payment system is effective in increasing preventive care. Physicians are motivated to provide quality care within a fixed budget. With this system, physicians will use their capacity in medical management and control various functions. Hospitals will find more infrastructures and create an effective health plan where patients can access quality care. The hospital will also purchase new services which help healthcare providers work effectively and handle capitation. Health care services will improve as physicians will be forced to learn new skills on management and IT and implement substantial investments on decision support systems. Physicians will create a collaborative relationship in influencing the health center image through quality services. They will take a proactive approach and be fully committed in practice operations. The hospital in general will apply responsible efforts and improve healthcare management so that the community can have universal access to healthcare. There will be a strong relationship between physicians and community in discussing the resources required in offering quality care.
Cons
In order to offer quality care, providers must ensure that the hospital has a high quality management which will help in providing cost-effective care. In other word, providers are required to operate effectively with the use of quality infrastructure which will cater for diverse cultures (Burke, 2016). The hospital will face difficulties in creating quality management structure and a fully integrated delivery system. Other disadvantage is that the payment system will pose investment challenge where new infrastructure, new roles and transformation of delivery system will be needed. The system will modify the provider payment as the organization will need to create new payment services and the process may cause conflict (Burke, 2016). The payment system will also pose challenges between providers and patients. In managing costs, the provider may change the utilization of management, equipments, approvals and denials. This may cause ‘customer- disappointment and damage the relationship.
If I were a heathcare aczar, I would favor the DRG payor system. The system has a positive impact on quality and efficiency. This method is effective in that it provides transparency and accurate description in financing (Burke, 2016). I like this system because it promotes greater efficiency through maximizing output. This means that providers will offer quality services to many patients with availability of resources. The system is effective for rate-setting system which means the productivity and effectiveness will be accurately measured (Burke, 2016).
Reference
Burke C. Gregory, Brundage C. Suzanne & Myers Nathan.(2016). Capitation and the Evolving Roles of
Providers and Payers in New York. United Hospital Fund.
Berenson A. Robert, Upadhyay K. Divvy, Delbanco F. Suzanne. Murray Roslyn. (2016). Diagnosis Related
Groups–Based Payment to Hospitals for Inpatient Stays. Urban Institution
