Of (Mis)Incentives in Healthcare — Part II of II

In our previous article, we established that the incentive system in private healthcare services needs a re-look. We were building a case of how a fee-for-service model benefits when more people are sick i.e. more sickness=more financial benefit.

In Part II of this article, I would like to propose a way this could be solved. The big word for this proposal would be alignment.

Imagine you’re running a pediatrics clinic. You’re in the field of treating children. How most pediatrics practices work right now is that parents have a set pediatrician to whom they take their children for treatment. The pediatrician charges for his/her services every time the child is sick or when the child needs vaccination. How can we turn this around to make a model through which the pediatrician actually makes money from keeping children healthier rather than from treating children when they are sick.

Here’s my proposal:

So if Children’s clinic A covers catchment area A.

In area A there are 20 schools.

Children spend a significant amount of their waking time at schools.

Each school has about 500 children. This makes approximately 10,000 children in this area.

Now what if, Children’s Clinic A partners with these 20 schools and pledges to work in partnership with the schools to promote health and well being. This is done by providing a set of services

1. Annual medical screening of children (to catch diseases early)
2. Training of teachers in health education topics which are then taught to the students (to promote healthy behaviours)
3. Set up of medical infirmaries at the schools with nurses in them monitored by the Children’s Clinic A. (to treat diseases early)
4. Any child that falls sick gets treatment at Clinic A against a medical card (for cases that still need the intervention of a doctor)

For this whole package, Clinic A charges the schools approximately Rs 100 per child per month. That is about 1 million in revenue, the cost of running such an operation would be less than 50% of this revenue by my estimate. We have been running this model at Clinic5’s School Health Services with good results.

In the model above, Clinic A is incentivized to prevent disease and promote well being because the fewer children that fall sick and need a clinic visit, the more schools one clinic could cater to. This model ALIGNS the social and financial incentive for Clinic A.

The model described above can also be applied to adults by partnering with workplaces in a similar manner. Employers pay significant amounts for health insurance fees for their employees. Most medical issues are often dealt with at the primary care level and often untreated illnesses escalate to the point where people then have to go to hospitals. If employees had such a coverage in their neighbourhood clinic, they would seek help early, which would lead to a healthier and more productive workforce.

Both of the interventions described above can be implemented within the private sector. The game could get even more exciting if the government gets involved in promoting the same. I believe this is a very efficient way of reaching universal health coverage.

Pay doctors to become agents of promoting health and well-being instead of paying them to be mercenaries treating sick patients. It makes intuitive sense to me. Would you agree?