The Journey from Pay-for-service to Pay-for-performance

Posted by Darshan Gandhi, M.D., M.B.A. 12/06/2016

The Journey from <em>Pay-for-service</em> to <em>Pay-for-performance</em>
The revenue that is generated from practice is the lifeline through which other services are made available. There is a need for a constant and solid revenue stream for physicians, hospitals and healthcare practices and providers. In such cases whereby the practices’ claims processing time gets slowed down, there arise many issues for the practices and hence a slowing down, making it difficult to manage expenses. The two prominent and current payment models in use are Pay-for-Service and Pay-for-Performance. While the first model has been in use for quite some time, the latter is a new idea and has come into existence with the primary purpose of reducing the medical costs but also to improve quality of care. In this article we try to bring out the differences between the two systems and also the advantages of the latter. We have discussed both the models in detail and tried to establish the major differentiating factors.

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