Fee-for-service healthcare is making us sick

More than 1.3 billion adults globally will have diabetes by 2050, according to a study released this year. In the U.S., our current health system — which is structured around treatment, not prevention — is woefully unprepared to deal with this reality.

For over 150 years, the U.S. healthcare infrastructure has centered on symptoms, doctors and treatments — not on patients. From our data collection to our systems design and payment models, it’s more profitable to treat sick patients than it is to keep communities healthy in the first place.

The latter is an approach known as “population health.” As it stands, our current focus on treating symptoms instead of encouraging overall wellness perpetuates health inequities and exacerbates social inequalities. With this in mind, it’s time to get serious about incentivizing population health.

A key strategy for population health is value-based care, in which providers are paid to improve health outcomes. In contrast, our current system is predominantly “fee-for-service,” a model that pays providers for each service or product they provide. This model incentivizes volume: The more individual treatments a provider delivers, the more money the provider makes.

Today, revenue from fee-for-service models accounts for almost 71 percent of an average medical practice’s income. You can see the conflict.

The fee-for-service model undermines population health. The current system is more likely to create opportunities for overtreatment. When a medical resource is readily available and financially advantageous, hospitals and doctors are more inclined to use it. For example, some studies suggest that when more hospital beds are available, more patients get admitted, regardless of their actual health condition.

By rewarding volume-based interventions rather than investing in preventive measures or addressing the underlying determinants of health, our system perpetuates a cycle of reactive, episodic care that fails to manage the fundamental drivers of poor health in the first place.

A 2022 survey by the Physician’s Foundation found that most doctors feel ill-equipped to address the underlying determinants of health, citing a lack of time and ability (and, I would add, a lack of financial incentive). Combined, these factors are a potent mix to keep the status quo.

To truly achieve health equity, we need to reorient our healthcare system’s incentives toward population health management and invest in principles that target fundamental drivers of poor health outcomes. We must prioritize investments in preventive care, early interventions and extending health care into communities to programs that can monitor and influence the social, political and environmental determinants of health, such as food insecurity, housing instability and financial barriers.

Paying providers for health impact would help create a healthcare system that rewards proactive measures and preventive care. This approach would focus on keeping patients healthy rather than treating disease.

Recently, health systems have experimented successfully with value-based reimbursement models. For example, the government’s Hospital Readmission Reduction Program reduced readmission rates in part by raising awareness and investment in mechanisms to better assist patients during discharge and transitions.

Critics argue that we can’t incentivize population health management at scale due to limitations in infrastructure and a host of other problems. But the very fact that reform seems so vast offers the most compelling reason to start now.

There are a few ideas for areas of focus based on what we know works and doesn’t work. One is for public health professionals to prioritize data collection and analysis, so as to inform population-health strategies effectively. Focusing on equitable data collection practices, to ensure data is representative, inclusive and actionable, will enable us to target interventions, allocate resources efficiently and measure progress. For example, applying population-health management principles for the diabetes population can help prioritize risk, check against national and state benchmarks and monitor for complications.

Second, we can engage communities in decision-making processes. Those closest to the problems should be part of the solution. Involving communities in the design and implementation of population health programs can help develop interventions that are culturally appropriate and responsive to a community’s true needs, such as accounting for food insecurity to pediatric health checks.

Third, advocacy groups should continue to push for a paradigm shift in social values when it comes to healthcare. We should move away from viewing health as a commodity to be monetized and instead recognize (and reward) the achievement of health and wellness as the overall objective through the expansion and creation of value-based programs, which are well documented in having profound positive impacts to our economy, our national security and more.

If we continue to prioritize profit over population health, we risk perpetuating health inequities and exacerbating social inequalities. Instead, we must shift the conversation towards creating new frameworks and recognizing the immense value and long-term benefits of investing in the health of our communities. By doing so, we can create a healthcare system that is truly equitable and focused on the wellbeing of all.

Juan Carlos Gonzalez Jr. is a health equity researcher and Assistant Vice President for the School of Global Health at Meharry Medical College. He is also a public voices fellow of The OpEd Project in partnership with AcademyHealth.