Related Experiment Video
Updated: Aug 2, 2026
14:32
Using Visual and Narrative Methods to Achieve Fair Process in Clinical Care
Published on: February 16, 2011
Aligning physician financial incentives in a mixed-payment environment
1Healthcare Management Program, Boston University School of Management, Massachusetts, USA.
Summary
Shadow pricing compensates physicians for all patients as if they were capitated, encouraging consistent care management. This strategy prepares practices for future capitation revenue while strategically justifying potential fee-for-service (FFS) utilization reductions.
Area of Science:
- Health Economics
- Physician Compensation Models
- Managed Care
Background:
- Physicians often manage a mix of fee-for-service (FFS) and capitated patients.
- Transitioning to capitation presents challenges for healthcare organizations and physician compensation.
Purpose of the Study:
- To evaluate the shadow-pricing approach to physician compensation.
- To assess its impact on care management and financial viability in mixed-payment environments.
Main Methods:
- Implementing a payment schedule treating all patients as capitated.
- Analyzing physician incentives for utilization and revenue.
- Developing strategies for target setting and acuity adjustments.
Main Results:
- Shadow pricing encourages uniform care management across FFS and capitated patients.
- It incentivizes a reduction in FFS utilization, potentially lowering immediate revenue.
- This approach can enhance organizational attractiveness to managed care payers.
Conclusions:
- Shadow pricing serves as a strategic investment for long-term viability in capitation.
- It aligns physician behavior with the shift towards capitated payment models.
- Careful implementation with utilization targets and acuity adjustments is recommended.
Related Concept Videos
01:18Introduction To Health Care Delivery System
The healthcare system is constantly changing and complex. Various services are available from different healthcare providers, but gaining access to these services has become challenging for people with limited healthcare insurance. Uninsured people present a challenge to healthcare because they frequently postpone or forego treatment.
The Institute of Medicine (IOM) advocates for a patient-centered, effective, safe, timely, equitable, and effective healthcare system. The National Priorities...
The Institute of Medicine (IOM) advocates for a patient-centered, effective, safe, timely, equitable, and effective healthcare system. The National Priorities...
01:26Methods Of Healthcare Delivery System
At the different levels of the healthcare system, we see varying methods of healthcare used. These methods include managed care systems, case management, and primary healthcare.
Managed Care System:
The managed care system is designed to control the cost while maintaining the quality of care. The patient's care from admission to discharge is planned by the primary care provider or the case manager, also known as the gatekeeper. In a managed care system, the number of care providers is limited...
Managed Care System:
The managed care system is designed to control the cost while maintaining the quality of care. The patient's care from admission to discharge is planned by the primary care provider or the case manager, also known as the gatekeeper. In a managed care system, the number of care providers is limited...
01:29Issues And Trends In Healthcare Delivery System
The issues and trends in healthcare delivery are constantly changing. The COVID-19 pandemic is one recent issue that wreaked havoc on healthcare systems, causing a shortage of healthcare workers, high demand for medicines and supplies, and increased medical expenditure due to a lack of insurance. Other issues include rising healthcare costs and care fragmentation.
Cost Containment
Payment for healthcare services has historically promoted adoption of costly and often unnecessary or inefficient...
Cost Containment
Payment for healthcare services has historically promoted adoption of costly and often unnecessary or inefficient...
01:20Integrated Healthcare System
An integrated healthcare system (IHS) is a set of organizations that provides for or arranges to provide coordinated and continuous service to a defined population. The IHS takes responsibility for that particular population's health status and outcome, both clinically and fiscally. An integrated healthcare system is a well-organized, well-coordinated, and collaborative network. The integrated delivery system is a network that connects different healthcare providers to deliver organized,...
01:30Health Information Technology and Healthcare Information System
Health Information Technology (HIT)
Health Information Technology, commonly called HIT, integrates advanced information systems and technology in healthcare settings. Its primary functions include:
Health Information Technology, commonly called HIT, integrates advanced information systems and technology in healthcare settings. Its primary functions include:
01:27Ethical Issues
Nurses are essential in patient care, upholding the ethical principles of their profession and effectively navigating ethical dilemmas. Neglecting ethical issues can lead to inadequate patient care, compromised therapeutic relationships, and moral distress among healthcare workers.
Ethical Concerns in Healthcare:
Ethical Concerns in Healthcare: