Salary… Salary… Salary…

[assalamualaikum & salam sejahtera]

Today’s topic is about salary.. As I mention on the previous post that the only motivation to the doctor is the reward or salary. What it is mean by salary? How they are paid? How much the doctors are paid?

1st question: what is salary?

Salary~synonym: wages/pay/income/earning - money that employees receive for doing their job, especially professional employees or people working in an office, usually paid every month

*These are all words for money that a person earns or receives for their work.

- income ~ money that a person receives for their work, or from investments or business: people on low incomes

- wage/wages ~ money that employees get for doing their job, usually paid every week: a weekly wage of £200

- pay ~ money that employees earn for doing th

eir job: The job offers good rates of pay

- salary ~ money that employees earn for doing their job, usually paid every month

- earnings ~ money that a person earns from their work: a rise in average earnings for factory workers

In other word, salary is one of the important aspect in the health system. What ever it is, the money is matters.

2nd question: How they are paid?

During recent years the question of how to provide the most cost-effective health care services has been of increasing interest to health care managers, health insurers, providers, patients, and governments. Provider payment systems have been central to this discussion. These mechanisms are defined as the way money is distributed from the government, insurance company, or other stakeholder to a health care provider. Different payment systems generate different incentives for efficiency, quality, and utilization of health care facilities, and these incentives may vary according to whether one is a provider, patient or payer.

When we are talking a

bout payment mechanism, there are four main actor who play a role in this. They are health care facilities (hospital), health care providers (doctors), patients, and the insurers/payers. This payment mechanism has a big, complex interaction between these 4 main actors. Each actors has their own goals in this payment mechanism.

Health care facility wants to deliver the services in cost effective. Health care provider wants to deliver the services that expand their incomes. Patient who insured does not has any problems of receiving the services because they are paid by the insurer. The problems will be on the provider and insurer. While for out-of-pocket patient, they seek health care to obtain services to cure their illness. But unfortunately, they do not know the quality of the services. Misleading measurement sometimes being used which is curative rate. The insurer/payers have goal of minimizing pay for the services or demand a certain quality of the services.

In defining a provider payment method, it is important to specify when payment rates are actually set. When the payment rate for a package of health care services is negotiated and agreed upon before the treatment takes place, it is referred to as prospective payment. Prospectively set payment rates—including case-based and per capita-based payment—increase the incentive for efficiency because the health provider faces higher financial risk.

When the payment rate is selected during or after the service has been rendered, it is referred to as retrospective payment, or sometimes as cost-based reimbursement and is well known for being cost enhancing rather than cost reducing. Fee-for-service is a typical form of retrospective reimbursement. Although prices for each service may be set in advance, providers are not limited by a predetermined agreement on the types and number of services rendered.

Here are the example of payment mechanism:

Payment Method	Unit of Services	Retrospective /Prospective	Main Incentive Created [Note: Quality assurance mechanisms should accompany each payment system method]
Line Item Budget	Functional Budget Categories	Either	Little flexibility in resource use, cost control of total costs, poor incentives to improve productivity, sometimes results in rationing
Global Budget	Health Facility	Prospective	Spending artificially set rather than through market forces, not always linked to performance indicators, cost-shifting possible if global budget covers limited services, rationing may occur
Capitation	Per person to a health care provider who acts as stakeholder	Prospective	Incentives to undersupply, strong incentives to improve efficiency that may cause providers to sacrifice quality, rationing may occur, improves continuity of care
Case-based Payment	Per case or episode	Prospective	Incentives to reduce services per case but increase number of cases (if per case rate is above marginal costs), incentives to improve efficiency per caser
Per Diem	Per day	Prospective	Incentives to reduce services per day but increase length of stay (if per diem rate is above marginal costs)
Fee-for-Service	Per unit of service	Retrospective	Incentives to increase units of service

Table 1: Six Payment Systems and Main Incentives Created

Sources: Maceira, Daniel. August 1998. Provider Payment Mechanisms in Health Care: Incentives, Outcomes, and Organizational Impact in Developing Countries. Major Applied Research 2, Working Paper 2. Bethesda, MD: Partnerships for Health Reform Project, Abt Associates Inc.

So, at the end, which payment system you are dreams for? Today’s payment system getting complex and more complex as they will continue to evolve to obtain best method of payment mechanism. The traditional system is evolve to modern system which everyone are looking for the best for themselves.

Hope, this several information on payment mechanism can express an understanding on physicians payment mechanism from various point of view.

References:

1. Maceira, Daniel. August 1998. Provider Payment Mechanisms in Health Care: Incentives, Outcomes, and Organizational Impact in Developing Countries. Major Applied Research 2, Working Paper 2. Bethesda, MD: Partnerships for Health Reform Project, Abt Associates Inc.

2. John Caroll. December 2007. How Doctors Are Paid Now, And Why It Has to Change. MANAGED CARE. ©MediMedia USA

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