Using the example of elective primary total hip replacements (THRs) for osteoarthritis — one of the most common elective surgical procedures in Organisation for Economic Co-operation and Development countries — a new study published in NEJM Catalyst illustrates the differences in clinical and financial practices between a capitation-based payment model and a fee-for-service model to illustrate why the payment model matters. The study looks at the capitation-based payment model as used by Kaiser Permanente, a private, integrated health system in the United States, and a fee-for-service model used by the AOK Federation, a not-for-profit health insurance system that comprises 11 public health insurance plans with about 27 million insurees that is representative of Germany’s public health care system. The authors also shed some light on the different incentive structures and how they contribute to Kaiser Permanente achieving significantly better medical outcomes while using notably fewer resources than its counterparts in Germany. Applying Kaiser Permanente’s clinical practices for its patients with THRs, the authors conclude that Germany would be able to increase quality of care and reduce the number of inpatient hospital days by more than 1.5 million as well as the number of postacute care inpatient days by 3.5 million per annum.
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