Health care costs in the United States have spiraled out of control while providing citizens with some of the poorest outcomes in the developed world. According to the World Health Organization, the per-capita total expenditure on health care by U.S. citizens in 2012 was $8,895. By comparison, using a country roughly the same size, on the same continent and in the same hemisphere, Canadian citizens spent $4,676 and were significantly less likely to die between the ages of 15 and 60 (83 men and 52 women per 1,000 in Canada compared with 130 men and 77 women per 1,000 in the United States).

Everyone who has anything to do with the U.S. health care industry is aware of numbers like these thrown around when describing the crisis that faces this country. Critics of the fee-for-service model of paying providers argue fee-for-service payments force providers to increase the volume of procedures or visits in a day, and as a result, the value each patient receives is diluted.

“The concern has been that health care costs in the United States continue to rise at an alarming rate,” says Mark Bogen, senior vice president of finance and chief financial officer at South Nassau Communities Hospital. “When you overlay that increase in cost year-to-year, you see that not only is it taking up a greater portion of the gross national product, but when economists and health care gurus and policy wonks compare the results of all that spending against other industrialized countries in terms of various benchmarks and indicators for quality of health care, we lag far behind. So generally speaking, the only way to get providers’ attention to deal with that problem is to impact the way all health care providers—hospitals, nursing homes, post-acute care settings as well as physicians—“get paid.”

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