HEALTHCARE FINANCE 3
Based on the Transcript, “Dr. Solomon’s Dilemma,” is tracking the costs of every health care
encounter and comparing one physician’s costs to other physicians a reasonable strategy to
reduce overall costs? What are the problems with this strategy? (use one page for this question)
I believe that tracking the costs of each healthcare encounter and then comparing the
physician's charge to the other physicians is an excellent strategy to help minimize the cost of
healthcare. Lepard, Walters, and Rozzelle (2018) assert that capitation system is a unique
strategy to implement in the hospital as it eliminates the risk of unnecessary treatment of the
patient for the extended time than they should. This strategy hence lowers the costs per patient as
this system promotes cost sharing with other members of the system. In capitation payment
system, the doctors enroll the patients and later paid the fixed amount of money regardless of the
prescribed treatment. These fees charged will be sent to the accounts of respective doctors, and
they make their own decision on the best way to retrieve the money from the patients.
The strategy of capitation is not perfect and has various problems. The challenge is the
fact that the doctors are at risk of losing some of their money in the event of a complicated case
of treatment. In such cases, the cost of treatment is likely to overwhelm the statistical value
assigned to them. The other problem in such system is that the doctors will try to avoid the
complicated cases and go for the patients who require natural treatment regimen. It will lower the
quality of healthcare the doctors given to patients who seek multiple treatments. The physicians,
in this case, will not be able to control spiraling costs. Nevertheless, doctors risk losing interests
in taking good care of the patients. On the other hand, capitation has various problems to the
patients. Capitation system may inhibit the enrolment of the patients seeking complicated
medical attention. It is because the physicians may make little or no profits when compared to
