Blog Post: By aligning financial incentives, Intermountain Healthcare will help everyone who’s involved in healthcare get better results for more affordable cost
By Joe Mott, Vice President, Healthcare Transformation
Jan 14, 2015
Updated Nov 17, 2023
5 min read
In the traditional healthcare model, hospitals and physicians are rewarded for providing more services, health plans are rewarded for managing expenses and the use of services, and patients are often uninformed, unengaged, and — from a financial perspective — only aware of their out-of-pocket expenses. At Intermountain, we believe we need a model of care that rewards hospitals and physicians for providing the right care rather than just providing more care. And we need health plans that encourage and reward patients for being engaged in their personal health and healthcare choices. When everyone has aligned incentives — when they’re all on the same team — everyone’s much more likely to get the results they want.
Aligning incentives will help all of us work for the same purpose, which is articulated by Intermountain’s mission: We’ll help people live the healthiest lives possible.
One of the key ways to create alignment is to discontinue paying hospitals and doctors based simply on how much care they provide and instead to pay them for providing the most effective and appropriate care that patients need, including tools to promote prevention and wellness. In this model, delivery systems like Intermountain would receive a “total cost of care” payment from insurers. That way, we would have the funds needed to invest in prevention, we would be able to support physicians and their staffs by helping educate patients, and the model would eliminate the inherent adversarial role that exists between providers of care and the payers of care.
It works like this: Instead of being paid after services are provided, hospitals and physicians are paid ahead of time by insurance companies and government payers for taking care of a group of people for a fixed time, with measures in place to ensure high-quality outcomes. Quality measures encourage the provision of the best care. Prepayment takes away the incentive that exists under the fee-for-service model to provide more care and instead incentivizes more effective care.
We’ll continue to provide the best evidence-based care proven to improve outcomes. And equally important, we’ll help patients improve their lifestyles so they are more likely to avoid the health concerns in the first place. When everyone has aligned incentives — when we’re all on the same team with the same goals — everyone wins.
Here’s an overview of how Intermountain will align financial incentives for everyone who’s involved in healthcare: