Health care costs in the United States have spiraled outof control while providing citizens with some of the poorestoutcomes in the developed world. According to the World HealthOrganization, the per-capita total expenditure on health care byU.S. citizens in 2012 was $8,895. By comparison, using a countryroughly the same size, on the same continent and in the samehemisphere, Canadian citizens spent $4,676 and were significantlyless likely to die between the ages of 15 and 60 (83 men and 52women per 1,000 in Canada compared with 130 men and 77 women per1,000 in the United States).

Everyone who has anything to do with the U.S. health careindustry is aware of numbers like these thrown around whendescribing the crisis that faces this country. Critics of thefee-for-service model of paying providers argue fee-for-servicepayments force providers to increase the volume of procedures orvisits in a day, and as a result, the value each patient receivesis diluted.

“The concern has been that health care costs in the UnitedStates continue to rise at an alarming rate,” says Mark Bogen,senior vice president of finance and chief financial officer atSouth Nassau Communities Hospital. “When you overlay that increasein cost year-to-year, you see that not only is it taking up agreater portion of the gross national product, but when economistsand health care gurus and policy wonks compare the results of allthat spending against other industrialized countries in terms ofvarious benchmarks and indicators for quality of health care, welag far behind. So generally speaking, the only way to getproviders' attention to deal with that problem is to impact the wayall health care providers—hospitals, nursing homes, post-acute caresettings as well as physicians—“get paid.”

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