Health Economics: Payment Methods, Hospital Markets, and Vertical Integration

These flashcards cover key terms and concepts from the lecture on Health Economics, focusing on payment methods, hospital mergers, vertical integration, and their implications for healthcare quality and costs.

Fee-for-Service (FFS) Payment

A payment method where providers are paid separately for each service or procedure, tied to the volume of services rather than outcomes.

Lump-Sum Payment (Capitation)

A fixed payment per patient per period to cover all necessary care, where the provider assumes financial risk for their patient's health.

Bundled Payment

A single payment that covers all services related to a specific treatment episode over a defined period, necessitating care coordination within a fixed budget.

Base Rate Plus Performance Bonus

A payment structure where providers receive a guaranteed base payment plus bonuses for meeting quality and efficiency targets.

Perverse Incentives

Unintended consequences of payment methods that encourage behavior contrary to patient welfare, such as overutilization or underutilization of services.

Hospital Merger

An event where two or more hospitals combine operations, which may lead to increased prices and mixed effects on quality.

All-Payer Rate Regulation

A system where a single entity sets standardized payment rates for all insurers, preventing price variation and ensuring predictability in costs.

Vertical Integration

A type of merger where upstream and downstream healthcare providers consolidate, potentially improving coordination but raising market power concerns.

Upstream-Downstream Coordination

The relationship where upstream providers’ decisions significantly affect the costs incurred by downstream providers.

Patient Selection (Cream-Skimming)

The practice where providers prefer to enroll healthier patients while avoiding those with high costs or complex conditions.

Performance-Based Contracts

Agreements that link provider payment to the achievement of specified quality or efficiency outcomes.

Administrative Costs

Expenditures associated with the organization and management of healthcare systems, which may rise with added bureaucratic structures.

Cherry-Picking

The practice of selecting patients likely to achieve favorable performance metrics while excluding those who may lower scores.

Cost-Shifting

When providers adjust pricing to compensate for lost revenue from one payer by increasing prices for another payer.

Inelastic Demand

A market condition where changes in price do not significantly affect the quantity demanded, typical in healthcare markets.

Network Adequacy

The extent to which a health insurance network provides sufficient providers to ensure access to needed care for all enrollees.

Quality Metrics

Measures used to assess the quality of care delivered by healthcare providers, often influencing payment structures.

Upcoding Severity

The practice where providers inaccurately increase the documented severity of a patient's condition to receive higher payments.

Bundling Services

The practice of grouping multiple related services into a single payment, with the goal of enhancing care coordination.

Regulatory Capture

A situation in which regulatory agencies are influenced by the industries they are supposed to regulate, often leading to biased decision-making.