As I was waiting to teach the second half of a Boston University MBA class (HM710, here) last night, I heard a student near the end of the first half saying that doctors would never focus on quality and efficiency improvements until the fee-for-service payment system ended and was replaced with a global, or capitated, payment system.
This, of course, is not so. You can look at our record and that of many hospitals to see dramatic improvements in quality and enhancements in efficiency under a fee-for-service payment system.
Our experience is that finances and methods of payments are not highly motivational to health care providers in the hospital setting. Instead, people are motivated by a genuine desire to improve the quality and safety of health care delivery. The problem is often a lack of knowledge of process improvement, requiring some training and encouragement from clinical leaders. Fortunately, once learned, there is a virtuous cycle between those activities and efficiency and cost-effectiveness.
So, while capitation may have important attributes, let's be careful not to underestimate the good intentions and ability of doctors and nurses to achieve worthwhile things under other payment regimes.