Value-based formulas for purchasing. PEHP's designated service provider program: value-based purchasing through...

Area of Science:

• Health economics
• Healthcare management
• Risk assessment

Background:

• Managed care and capitation are often conflated.
• Capitation models are frequently based on a flawed, unidimensional view of risk.
• This approach limits effective healthcare purchasing strategies.

Purpose of the Study:

• To challenge the unidimensional model of risk in managed care.
• To propose a multidimensional risk model for healthcare purchasing.
• To advocate for global fees as an optimal purchasing modality.

Main Methods:

• Rejection of the unidimensional risk model by PEHP of Utah.
• Adoption of a multidimensional risk model.
• Utilizing global fees for episodes of care as the purchasing strategy.

Main Results:

• Global fees provide enhanced purchasing clarity.
• Providers can focus more efficiently on the Marginal Rate of Technical Substitution.
• The multidimensional model aligns with the complex reality of healthcare risk.

Conclusions:

• Global fees are a superior purchasing modality compared to traditional capitation.
• This approach optimizes both patient choice and provider cost-consciousness.
• Adopting a multidimensional risk framework is crucial for effective managed care.