Why are countries spending so much without consistent results?
The key challenge is that different actors in the healthcare system respond to different incentives, which often have very little do with the quality of patient care or patient outcomes.
For example:
- Providers such as hospitals and clinics, who are often paid for each service they provide (known as the fee-for-service payment model), aim to maximize the volume of patients they see and the services they deliver.
- Payers, typically insurers, aim to minimize costs. They're focused on the medical loss ratio: the percentage of a healthcare premium spent on healthcare services for patients.
- Medtech and biopharma companies aim to maximize their profits.
- Academia and research organizations aim to maximize the number of publications they generate.
As one can see, many actors in the system have different incentives focused on volume, such as the number of publications or total dollars earned. But these incentives have very little to do with value for patients. As a result, the patient gets lost in the system.
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